Category: Economy

New Delhi: Levelling fresh allegations against Sebi Chief Madhabi Puri Buch, US based short seller Hindenburg yet again trained guns at her again, asking if proper disclosures were made or not. 

Hindenburg threw down the gauntlet, asking if the Sebi chief will publicly release the full list of consulting clients and details of the engagements, stating Madhabi Buch’s response to its report includes several important admissions and raises numerous new critical questions. 

Hindenburg further goes on to allege that the fact that Madhabi Buch remained personally invested in the same funds by the sponsor she was tasked with investing, is a ‘massive conflict of interest’.

Questions have also been raised whether the Sebi Chief has recused herself in matters involving potential conflicts of interest?

Senior Advocate and Former Advocate General of Sikkim Vivek Kohli in a candid Q&A with Reema Sharma of Zee Media said, two aspects, amongst various other factors, require specific attention while considering a “conflict of interest” situation. The first is how current is the interest and the second is how proximate is the interest. Thus, while the first concerns the time axis, so to say, the second concerns the relationship axis.

Viewing the present controversy from either aspect would reveal that the allegations appear to be stretched, if not – as one would say – a long shot, said Kohli.

“In so far as the time axis is concerned, it appears from the information available that the alleged investments made by the Buchs in a fund based out of Mauritius pre-dated one of them taking up a public assignment. Further, even prior to taking the public assignment, in March of 2017 they withdrew Mrs. Buch’s name from the investment and subsequently, post taking up the assignment, decided to terminate the investment and redeem the investment. This appears to have occurred in 2018. Any alleged relationship ended in 2018. Much prior to the alleged market play, if any. Thus, on this count, the alleged “conflict of interest” allegation seems to be a little dated and stretched,” Kohli explained.

Coming to the second issue, the “relationship axis”. The reason for them to invest, in the particular fund they chose to invest in, also appears to be a logical one – where the Chief Investment Officer was a long standing friend and someone who enjoyed their confidence. 

Kohli says, one of the key drivers in a financial investment is the confidence that the person managing the affairs of the investee inspires. It was not a random without cause investment. Further, the same person (CIO) has already stated, unequivocally, that no investment from this particular Fund (IPE Plus) was made in any Adani instruments of any nature. Thus, there was no direct or proximate relationship between the alleged investment made by the Buchs and any Adani entity. On this count too, the alleged “conflict of interest” allegation seems to be a little stretched.

“The entire basis of the allegations, that in some other fund managed by the concerned Financial Institution there is the possibility of some unexplained movement of funds, is remote from both, the time and relationship aspect as far as the Buchs are concerned.”

Meanwhile, Hindenburg in its tweet series asked if the Sebi chief will publicly release the full list of consulting clients and commit to a transparent or public investigation into these issues.

“Given this, will she publicly release the full list of consulting clients and details of the engagements, both through the offshore Singaporean consulting firm, the Indian consulting firm and any other entity she or her husband may have an interest in? Finally, will the SEBI Chairperson commit to a full, transparent and public investigation into these issues?,” it added.

Advocate Vivek Kohli  has termed the report as Possibly the figment of a very active imagination and unworthy of the attention and time.

New Delhi: Against the backdrop of US-based short seller Hindenburg Research alleging that Sebi Chairperson Madhabi Puri Buch previously held investments in offshore funds also used by the Adani group, eminent business and tech analyst, and economist Daniel Geltrude said that the allegations “can destroy investor confidence”. 

“Corruption involving offshore funds can erode foreign inflows,” said Geltrude. 

He also said that the Sebi chairperson should resign. “I think there’s a real concern here because if the chair is actually linked to this situation, it’s going to destroy investor confidence in India… People are going to be skeptical so if you have a scandal involving the chair of the security gate standard, well, that’s something we have to take very very seriously,” added Geltrude. 

Meanwhile, Madhabi Puri Buch and her husband Dhaval Buch released a second, more detailed statement on Sunday, categorically denying the charges levelled by the US short seller, and sharing a host of specific details including their career history, education and certain investments. 

However, responding to the 15-point statement issued by the Buchs, Hindenburg took to microblogging site X (formerly Twitter) to say that their responses include “several important admissions” and raise “numerous new critical questions”.

On Saturday, the US-based firm alleged, citing whistleblower documents, that Madhabi Puri Buch and Dhaval Buch held stakes in an offshore fund where a substantial amount of money was invested by associates of Vinod Adani, brother of Adani group chairman Gautam Adani.

Meanwhile, capital market regulator Sebi asked investors to remain calm and exercise due diligence before reacting to such reports. 

Mutual fund industry body AMFI also came in support of the Sebi chairperson, saying that the US short-seller is trying to create a trust deficit in the market ecosystem.

AMFI said that external comments on the markets regulator’s Chairperson “not only attempt to undermine Madhabi Buch’s contribution to the Indian capital market, but it also undermines our country’s economic progress, and creating a trust deficit in the market ecosystem must be seen for what they truly are — attempts to create sensation by connecting random events done in the past”.

(The Story Originally Appeared In Zeebiz.com)

New Delhi: The Adani group stocks including Adani Enterprises Ltd and Adani Power Ltd will be keenly watched on Monday as the market opens following Hindenburg’s latest report (published Saturday 10 August 2023), alleging Sebi Chairperson and her husband in the company’s ‘Obscure Offshore Funds’.

Securities and Exchange Board of India (Sebi), has issued a statement for investors, asking them to be calm.

“SEBI takes note of the report published by Hindenburg Research on August 10, 2024. Investors should remain calm and exercise due diligence before reacting to such reports. Investors may also like to take note of the disclaimer in the report that states that readers should assume that Hindenburg Research may have short positions in the securities covered in the report,” said the market regulator .

Zee Business Managing Editor Anil Singhvi has cautioned the revelations and allegations will eclipse investment sentiments in the market. He added that the news may affect both investor sentiment and wealth. Terming it as a ‘serious matter for the market’, Singhvi said that market participants will be ‘closely tracking headlines on the matter as transparency is very important for the market’.

The Hindenburg latest report, citing Whistleblower Documents, said that it showed “Madhabi Buch, The Current Chairperson of SEBI, And Her Husband Had Stakes In Both Obscure Offshore Funds Used In The Adani Money Siphoning Scandal.”

Singhvi further added that the situation is going to be tough. He added, “It will be a tough call whether the Sebi chairperson should stay at the helm of the powerful institution that Sebi is at least until any likely investigation is underway” 

Further opining that the case might instill in some sort of doubts amongst investors, Singhvi said, “Doubts will likely emerge among investors as the news follows Sebi’s clean chit to Adani… Hindenburg had shared a cryptic message on X (formerly Twitter) that it would come up with ‘something big’ on India, but nobody would have thought about possible connections between the Sebi chief and Adani,” said Singhvi. 

The market guru also asserted that the turn of events will spell big repercussions for the market “Although the Sebi chairperson has asserted that she is ready to reveal “any and all” documents needed in relation to this matter, it may still be a big setback for the market, the market guru added.” 

Meanwhile, Sebi chief, has given a point by point rebuttal to the Hindenburg report has said that certain allegations made against SEBI would be addressed by the institution independently, while the couple would like to address the issues pertaining to them in their personal capacity.