Hindeburg Research alleged that it suspects unwillingness by SEBI - Securities and Exchange Board of India - to act against Adani Group may be because of its head Madhabi Puri Buch had stakes in offshore funds linked to the conglomerate - an allegation that the SEBI head called "baseless" and an attempt of "character assassination".
Allegations by US-based investment research firm Hindenburg have sparked another controversy in India over a year after it accused Adani Group of pulling "the largest con in corporate history" by using a web of companies in tax havens to inflate its revenue and manipulate stock prices, even as debt piled up.
The fresh allegations by Hindeburg Research are against SEBI - Securities and Exchange Board of India. The US short-seller alleged that it suspects SEBI's unwillingness to act against Adani Group may be because of its head Madhabi Puri Buch had stakes in offshore funds linked to the conglomerate - an allegation that the SEBI head called "baseless" and an attempt of "character assassination".
The allegations have triggered a political slugfest, with the Congress and other INDIA bloc parties demanding Madhabi Puri Buch's removal and a joint parliamentary committee (JPC) probe, and the ruling BJP accusing the opposition of being a part of a conspiracy to create financial instability and chaos in India.
What Are Hindenburg's Allegations Against SEBI: US short-seller Hindenburg Research alleged that it suspects SEBI's unwillingness to act against Adani Group may be because of its head Madhabi Puri Buch had stakes in offshore funds linked to the conglomerate - an allegation that the SEBI head called "baseless" and an attempt of "character assassination".
Hindenburg alleged that Buch and her husband had undisclosed investments in obscure offshore funds in Bermuda and Mauritius, the same entities allegedly used by Vinod Adani - the elder brother of group chairman Gautam Adani - to round-trip funds and inflate stock prices.
Allegations Against SEBI Head, Her Husband: Hindenburg on Saturday stated that the Madhabi and her husband invested in offshore entities that were allegedly part of a fund structure managed by India Infoline and in which Vinod Adani, elder brother of group chairman Gautam Adani, also had investments. These investments reportedly date back to 2015, well before her appointment as a whole-time member of SEBI in 2017 and the subsequent elevation as chairperson in March 2022.
Hindenburg said Bermuda-based Global Opportunities Fund, which allegedly was used by entities connected to Adani Group to trade in shares of group companies, had sub-funds. Buch and her husband were investors in one of these sub-funds in 2015.
Citing "whistleblower documents", Hindenburg said, "Madhabi Buch, the current chairperson of SEBI, and her husband had stakes in both obscure offshore funds used in the Adani money siphoning scandal."
What Did SEBI Say: Madhabi Puri Buch and her husband Dhaval Buch in a joint statement strongly denied the "baseless allegations and insinuations made in the report". The same, they said, "are devoid of any truth".
"Our life and finances are an open book," they said. "It is unfortunate that Hindenburg Research against whom SEBI has taken an enforcement action and issued a show cause notice has chosen to attempt character assassination in response to the same."
Buchs said they have no hesitation in disclosing any and all financial documents, including those that relate to the period when we were strictly private citizens, to any and every authority that may seek them. While the statement did not talk on the questions Hindenburg raised over SEBI probe, the duo promised to come out with a detailed response.
Hindenburg Asks More Questions To Buchs: Following statements made by Madhabi Puri Buch and her husband Dhaval Buch, Hindenburg Research posed new questions for the SEBI chairperson alleging that her response contained several significant admissions and raised critical new questions.
In a social media post on 'X', the US short seller stated that "SEBI Chairperson Madhabi Buch's response to our report includes several important admissions and raises numerous new critical questions."
What Adani Said: Adani group in a regulatory filing called the allegations by Hindenburg as "malicious, mischievous and manipulative selections of publicly available information to arrive at predetermined conclusions for personal profiteering with wanton disregard for facts and the law."
"The Adani Group has absolutely no commercial relationship with the individuals or matters mentioned in this calculated deliberate effort to malign our standing," it said. "We remain steadfastly committed to transparency and compliance with all legal and regulatory requirements".
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Rejecting the allegations, it said they were nothing but a "recycling of discredited claims that have been thoroughly investigated, proven to be baseless and already dismissed by the Supreme Court in March 2023."
Oppn Demands SEBI Chief's Resignation, JPC Probe: On Sunday, the Congress and other INDIA bloc parties demanding her removal and a joint parliamentary committee (JPC) probe, and the ruling BJP accusing the opposition of being a part of a conspiracy to create financial instability and chaos in India.
The opposition parties also urged the Supreme Court to step in. The Congress said the government must act immediately to eliminate conflicts of interest in SEBI's investigation of the Adani Group and renewed the demand for a JPC probe into the entire matter.
Leader of Opposition in Lok Sabha Rahul Gandhi said the integrity of SEBI has been "gravely compromised" by the allegations against its chairperson and asked whether the Supreme Court would look into this matter suo motu once again following the revelations.
Honest investors across the country have pressing questions for the government: Why hasn't SEBI Chairperson Madhabi Puri Buch resigned yet? ...If investors lose their hard-earned money, who will be held accountable -- PM Modi, the SEBI Chairperson, or Gautam Adani?" the Congress leader said.
BJP Alleges Conspiracy: The BJP alleged that the Congress and other opposition parties are part of a conspiracy to create financial instability and chaos in India and rejected Hindenburg's charge against the SEBI chairperson as an attempt to discredit the financial watchdog.
BJP spokesperson Sudhanshu Trivedi said the short-selling firm, which last year levelled serious allegations against the Adani group, is facing scrutiny from Indian probe agencies.
ALSO READ | SEBI Chief Denies Hindenburg Report: 'Character Assassination Attempt'
Opposition parties are echoing its allegation, and the conspiracy is now clearly visible that they want to create chaos and instability, especially in the financial sector, he told news agency PTI.
BJP leader and former Union minister Rajeev Chandrasekhar said the short-selling firm has clearly attacked market regulator SEBI in an "obvious partnership" with the Congress and has an ominous motive and goal.
It is to destabilise and discredit one of the world's strongest financial systems and create chaos in the world's fastest-growing economy, he said on X.
Hindenburg's Earlier Allegations Against Adani: In January last year, Hindenburg Research, known for betting against companies like Nikola Corp and Twitter, accused the Adani Group of running "the largest con in corporate history." They claimed the group used companies in tax havens to inflate revenue and manipulate stock prices while accumulating debt.
The Adani Group strongly denied these accusations, but the report caused a massive drop in the group's stock value, wiping out over $150 billion at its lowest point. Most of the group's 10 listed companies have since recovered their losses.
Following the Hindenburg report, the Supreme Court asked SEBI, the market regulator, to investigate and set up a separate panel to look into regulatory lapses. The panel did not find any major issues with Adani, and the Supreme Court said no further investigation was needed beyond SEBI's.
On June 26 this year, SEBI issued a notice accusing Hindenburg of "deliberately sensationalising and distorting certain facts" and collaborating with a New York hedge fund to profit from its bet.