Madhabi Buch-Adani connection: How SEBI’s credibility has hit an all-time low after latest Hindenburg report

Since the release of a report by US-based short seller Hindenburg Research, linking the chairperson of the Securities and Exchange Board of India (SEBI), Madhabi Puri Buch, to the Adani conglomerate, the credibility of India's market regulator has come under intense scrutiny.

The controversy stems from SEBI's apparent reluctance to investigate allegations that its chairperson, Madhabi Puri Buch, and her husband, Dhaval Buch, invested in funds allegedly connected to the Adani money siphoning scandal, as outlined in the Hindenburg report. Despite the serious nature of these claims, SEBI's response has been limited to a generic press release issued on August 10, which remains the regulator's only public statement on the matter. Neither SEBI's board of directors nor the Ministry of Finance, which oversees the regulator, has offered any further clarification.

The press release from SEBI notably glosses over the accusation that Madhabi and her husband invested in funds reportedly utilized by Vinod Adani, the brother of Adani Group chairman Gautam Adani. Earlier in April, reports suggested that an investigation into 12 offshore companies that invested in Adani stocks was nearing a conclusion. However, just a few months later, SEBI issued a showcause notice to Hindenburg over its report, raising suspicions that behind-the-scenes activities might have influenced these developments.

Further fueling the controversy are reports claiming that Madhabi Puri Buch held two meetings with Gautam Adani while the investigation was still ongoing.

Growing Calls for a Probe into Madhabi Puri Buch

In response to these allegations, Rahul Gandhi, Leader of the Opposition in the Lok Sabha, has called for a Joint Parliamentary Committee (JPC) to investigate the charges against SEBI's chairperson. Gandhi questioned who would be held accountable if investors were to lose their savings due to any misconduct. He pointedly asked, "Is the Prime Minister of India responsible? Is Madhabi Buch responsible, or is Mr. Adani responsible?" Gandhi further suggested that Prime Minister Narendra Modi's resistance to a JPC probe is becoming increasingly clear.

Former finance ministry secretary EAS Sarma has also weighed in, advocating for an independent judicial panel to investigate the alleged connections between the Adani Group and SEBI's chairperson. Sarma warned that any interference with the independence of statutory institutions like SEBI would undermine public trust and damage the institution's credibility.

Last week, a petition was filed in the Supreme Court, urging it to expedite the investigation into Adani that the court had previously ordered following Hindenburg's initial allegations. The petition underscored that the claims made by Hindenburg have created an "atmosphere of doubt" that needs to be resolved.

As the situation unfolds, the pressure is mounting on SEBI and its leadership to address the allegations transparently and restore confidence in India's financial regulatory system.