New Delhi:

Jai Anant Dehadrai, the lawyer who last year accused a Trinamool MP of accepting bribes to ‘target’ the Adani Group, reacted Thursday to news Hindenburg Research – the United States-based short seller that alleged, with no apparent evidence, financial impropriety by the business giant – will be disbanded.

In a lengthy post on X this morning, Mr Dehadrai also linked Hindenburg shutting down to the return of Donald Trump as the US President on January 20; earlier an influential member of Mr Trump’s party had called out a decision by the outgoing government, led by Joe Biden, to probe certain Adani firms.

Mr Dehadrai also hit out at the Trinamool leader – labelling the person a “crooked puppet who tried spinning a conspiracy-theory (around Hindenburg’s allegations), particularly against the Prime Minister (Narendra Modi)”, and demanded the MP be “subjected to rigorous custodial inquiry”.

“With Hindenburg shutting down mere days before Trump takes office, the message couldn’t be clearer: the attacks on Prime Minister Modi, the Adani Group, and India’s stock market regulator (the Securities and Exchange Board of India) were not just about profit – they were part of a calculated and synchronised effort to sow instability in India,” Mr Dehadrai alleged.

“But here’s where it gets truly interesting. With (Hindenburg founder) Nate Anderson now fully exposed and in retreat – who were the crooked puppets in India who tried spinning a conspiracy-theory around the above mentioned entities?”

With Hindenburg shutting down mere days before Trump takes office, the message couldn’t be clearer: the attacks on Prime Minister Modi @narendramodi, the Adani Group @gautam_adani, and India’s stock market regulator @SEBI_India were not just about profit—they were part of a…

— Jai Anant Dehadrai (@jai_a_dehadrai) January 16, 2025

“Will the former MP who orchestrated many of these attacks in India, particularly against the Prime Minister, be fully investigated and subjected to a rigorous custodial inquiry and global financial audit?” he continued, claiming, “The money-trail from this individual will lead to some of the most notorious criminal entities to have ever existed – worldwide.”

Earlier today, Mr Anderson, in a note on Hindenburg’s website, said the company would be shut down after completion of pending projects. The announcement comes days before Mr Trump is to take office. However, Mr Anderson claimed no threat in the decision to close his firm.

READ | US Short Seller Hindenburg, Which Targeted Adani Group, To Shut

In 2022, Hindenburg Research made multiple allegations of financial impropriety by the Adani Group. The charges were firmly and completely denied by the company, which trashed them as “nothing but lies” and called them “calculated attacks on India and the Indian economy”.

READ | Adani Group Refutes Hindenburg Allegations, Calls It “Attack On India”

Later the Supreme Court gave both the Adani Group and SEBI a clean chit.

READ | Supreme Court Backs Clean Chit To Adani Group In Hindenburg Row

The allegations were recycled in August last year.

They were once again firmly dismissed; the business behemoth’s chairman, Gautam Adani, slammed the “dual assault targeting our financial stability and pulling us into a political storm”. “It was a calculated move,” he said.

READ | Adani Group, SEBI Chief, Industry Leaders Slam “Discredited” Hindenburg

Hindenburg also targeted SEBI chief Madhavi Puri Buch and her husband, both of whom called the allegations an “attempt at character assassination”. This was after the markets’ regulator flagged what it said were violations by Hindenburg and its sole owner, Mr Anderson.

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It has been over two weeks since a Hindenburg Research report revealed serious conflicts of interests vis-a-vis the chairperson of the Securities and Exchange Board of India (SEBI). Two separate responses to the report were issued on August 11 — an unsigned statement from SEBI and a joint statement issued by Madhabi and Dhaval Buch. These statements in effect confirmed the veracity of Hindenburg’s revelations, casting more doubts over the regulator’s integrity. As the appointing authority of SEBI’s whole-time members, the Central government owes explanations to all stakeholders.

Did the government know?

The first conflict of interest revealed by Hindenburg relates to an investment worth $8,72,762 (over ₹5.6 crore at the 2015 exchange rate) made by Madhabi and Dhaval Buch in Bermuda based Global Dynamic Opportunities Fund [GDOF Cell 90 (IPEplus Fund 1)] through Mumbai-headquartered IIFL Wealth & Asset Management Limited (now renamed 360 One).

Madhabi and Dhaval Buch’s joint statement confirms the investment made in 2015 and clarifies that it was driven by the fund’s Chief Investment Officer (CIO), Anil Ahuja, who was “Dhaval’s childhood friend from school and IIT Delhi and, being an ex-employee of Citibank, J.P. Morgan and 3i Group plc, had many decades of a strong investing career”. The statement says that the investment was redeemed in 2018 when Anil Ahuja left his position as CIO of the fund. The joint statement, however, fails to mention that Anil Ahuja also served as a director of Adani Enterprises Limited when that investment was made, and remained in that position until May 31, 2017. An email revealed by Hindenburg shows that it was Madhabi Buch who sent the redemption request to GDOF on behalf of Dhaval Buch on February 25, 2018, when she was already a whole-time member of SEBI (appointed on April 5, 2017).

Also read: Why is SEBI’s credibility under a cloud? | Explained

Therefore, two obvious questions arise: first, was Madhabi Buch’s investment in an offshore fund operated by a director of Adani Enterprises disclosed to the Central government prior to her appointment as a whole-time member of SEBI? Second, did her shareholding in the offshore fund after her appointment in April 2017, till its redemption in February 2018, have the approval of the Board? The Central government must clarify this.

Relevance to the Adani Group probe

The Hindenburg revelations are of vital consequence to the ongoing SEBI investigation into the Adani group companies as well as the Supreme Court order of January 3, 2024. While ruling that the investigation into the Adani group companies did not warrant a transfer from SEBI to a Special Investigation Team (SIT) or the CBI, the Supreme Court had held that the “threshold for such a transfer of investigation has not been demonstrated to exist”. The Supreme Court appointed Expert Committee had elaborated in its report on how the SEBI (Foreign Portfolio Investors) Regulations, 2014 were diluted in 2018 and 2019 to enable the concealment of “ultimate beneficial owners” of offshore funds. The Expert Committee demonstrated that these regulatory amendments made it difficult to establish the ultimate beneficial owners of the 13 offshore funds that were suspected by SEBI for being fronts of the Adani promoter group.

The funds under the SEBI investigation include the Emerging India Focus Funds and EM Resurgent Fund, which were managed by IIFL Wealth & Asset Management Limited (360 One), as revealed by the Organized Crime and Corruption Reporting Project (OCCRP). Was the Expert Committee made aware of Madhabi Buch’s investment in such an opaque offshore fund through IIFL Wealth & Asset Management Limited (360 One), which was also managed by a director of Adani Enterprises, even after joining SEBI as a whole-time member? This evident conflict of interest remained unreported in the Expert Committee report as well as the top court order.

Moreover, SEBI had approved the acquisition of Ambuja Cements and ACC by the Adani group in August 2022 during Madhabi Buch’s tenure as chairperson. In response to a RTI query in April 2023, SEBI disclosed that its chairperson had a meeting with the Adani group Chairman on August 11, 2022 at the SEBI headquarters to “discuss open offer applications of Ambuja Cements and ACC”. There was a second meeting between the two on October 3, 2022 on an unspecified agenda.

The Adani group disclosed on August 23, 2022 that the acquirer of the controlling stakes in these cement companies was a Mauritius based company whose ultimate beneficial owner was Vinod Adani, establishing him as part of the promoter group. Despite this, the Adani group has continued to maintain that Vinod Adani is not a “related party” when it comes to the suspicious transactions in Adani shares by FPIs or offshore funds linked to him.

This obfuscation by the Adani group was enabled by successive amendments to the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (LODR) since 2018, redefining “related party” and “related party transactions”. While the Expert Committee flagged the LODR amendments as regulatory dilutions, SEBI’s approval of the Adani group’s acquisitions of Ambuja Cements and ACC acquisitions was never examined.

SEBI’s investigation into the violation of promoter shareholding regulations by listed Adani group companies had started in October 2020. Despite the Supreme Court prodding it to complete the probe by April 2024, SEBI’s statement on August 11, 2024 describes the probe status as “close to completion”.

In the light of the SEBI chairperson’s conflict of interests, it not only appears to be a “glaring, wilful and deliberate inaction” on the part of the regulator but a calculated cover up operation. This warrants a transfer of the investigation to a SIT or the CBI. The role of the current SEBI chairperson and IIFL Wealth & Asset Management Limited (360 One) in all investigative matters related to the Adani group companies since 2018 also needs to be brought under the probe’s ambit.

Other conflicts

Hindenburg has also raised concerns over the SEBI chairperson’s shareholding in two consulting companies, namely India-based Agora Advisory and Singapore-based Agora Partners. Madhabi and Dhaval Buch’s clarification that these companies “became immediately dormant on her appointment with SEBI”, is prima facie false. The statement itself makes the self-contradictory claim that “after Dhaval retired from Unilever in 2019, he started his own consultancy practice through these companies” which allowed him to “work with prominent clients in the Indian industry”.

Madhabi Puri Buch had served as a whole time member of SEBI between April, 2017 and October, 2021 and was subsequently appointed as its chairperson in March 2022. Documents from India’s Corporate Affairs Ministry show Ms. Buch as the owner of 99% shares of Agora Advisory Private Limited as on March 31, 2024. This private company, active as on date, made over ₹3.6 crore in revenues between 2017 and 2024. The SEBI chairperson, who was a whole-time board member since 2017, has continued to occupy another office of profit, in violation of SEBI’s “Code on Conflict of Interests for Members of Board” (Section 5.1). This not only makes her position as SEBI chairperson untenable but also implicates the entire Board along with its appointing authority, for allowing such subversion of its own code of conduct. There should be an immediate disclosure of all the clients of the Agora Advisory Private Limited and Agora Partners and a probe into probable quid pro quo.

Hindenburg has also revealed that Dhaval Buch’s current employer, multinational private equity firm Blackstone, directly benefited from the SEBI chairperson’s aggressive promotion and regulatory decisions vis-a-vis Real Estate Investment Funds (REITs). In response, SEBI states that “the claim that promoting REITs…among various other asset classes by SEBI was only for benefiting one large multinational financial conglomerate, is inappropriate”.

Thus, there is neither a denial of SEBI chairperson’s promotion of REITs nor of the fact that her husband’s employer, Blackstone, made thousands of crores in profit through three out of four REIT IPOs, that have been approved by SEBI till date. The Securities and Exchange Board of India Act, 1992 mandates SEBI to protect the interests of the investors, and promote the development of and regulate the securities market. Promoting individual asset classes like REITs is not a function of SEBI, as defined under the laws. Rather, such favouritism towards a specific asset class by SEBI chairperson, particularly when her spouse is employed in a major player benefiting from such preferential treatment, amounts to a possible violation of the Securities and Exchange Board of India (Terms and Conditions of Service of Chairman and Members) Rules, 1992.

The SEBI Rules prohibit the chairperson or whole-time members to have any financial or other interests which are likely to prejudicially affect their functioning.

What next?

The conflicts of interests vis-a-vis the SEBI chairperson are borne out through her own statements and actions, which is why SEBI’s citation of Hindenburg’s own conflict of interest in the matter as a short-seller in order to undermine the latter’s revelations, does not hold much water. They must be addressed systemically in order to restore the regulator’s credibility.

There has been a surge in retail investor participation in the Indian securities market in the past few years. The latest Economic Survey estimated that around 20% of Indian households may now be channelling their household savings into the financial markets. A compromised securities market regulator only enhances the risks to their financial security and overall financial stability.

Prasenjit Bose is an economist and activist.

New Delhi:

In the Centre’s first reaction to the latest report released by Hindenburg Research, Union Minister Kiren Rijiju has said that the Congress and some of its allies want to destroy the country. The principal opposition party and others, he said, could not win the elections and are now aligning with anti-India forces.

On Saturday, Hindenburg Research, which is a US-based short-seller, released a report claiming that Securities Exchange Board of India (SEBI) chairperson Madhabi Puri Buch and her husband, Dhaval, had a stake in offshore entities used in alleged financial wrongdoing by the Adani Group.

When he was asked about the report and the allegations made by the Congress, Mr Rijiju said on Monday, “We have to understand that there are many forces, both inside and outside the country, who are against India and work against it. We have to recognise them. The people who are playing games to hurt India’s ascent as an economic power… I feel that the Congress and some of its allies want to destroy the country. They could not defeat Prime Minister Narendra Modi because the country is standing with him.”

“Elections have taken place and a new government has been formed under PM Modi. They could not win the elections and they are working with anti-India forces to ensure that India suffers a loss. They will never be successful because the people of India have realised who the anti-India forces are,” Mr Rijiju, who holds the Minority Affairs and Parliamentary Affairs portfolios, added. 

Earlier on Monday, BJP leader Ravi Shankar Prasad took a similar stance and said the Congress is involved in creating economic instability and anarchy against India.

“After losing (the Lok Sabha elections) for a third time, the Congress and its closest ‘toolkit’ allies now want to make the Indian economy unstable. Congress today has developed hatred against India. What Congress wants is to bring back ‘control Raj'” Mr Prasad said.

The BJP leader also stressed that India is a safe, stable and promising market. 

‘Character Assassination’

Madhabi and Dhaval Buch have accused Hindenburg Research of attempting a character assassination of the SEBI chairperson.

“Hindenburg has been served a show cause notice for a variety of violations in India. It is unfortunate that instead of replying to the show cause notice, they have chosen to attack the credibility of SEBI and attempt character assassination of the SEBI Chairperson,” the couple said in a statement. 

The Adani Group has also said Hindenburg Research has made “recycled claims”.

“For a discredited short-seller under the scanner for several violations of Indian securities laws, Hindenburg’s allegations are no more than red herrings thrown by a desperate entity with total contempt for Indian laws,” the group said in an exchange filing.

(Disclaimer: New Delhi Television is a subsidiary of AMG Media Networks Limited, an Adani Group Company.)

File picture of Madhabi Puri Buch, Chairperson of Securities and Exchange Board of India (SEBI)
| Photo Credit: Reuters

The chief of India’s markets regulator, Madhabi Puri Buch, who is under attack from Hindenburg Research following its accusations against the Adani Group, is renowned as a no-nonsense leader who is used to difficult situations.

The first woman at the helm of the Securities and Exchange Board of India, Ms. Buch has a tough, businesslike approach to her work, people who know her say.

On Saturday, Hindenburg alleged she had a conflict of interest in the Adani matter because of a previous investment in an offshore fund used by the Adani Group.

Ms. Buch countered saying the investments pre-date her term at SEBI and that all necessary disclosures were made.

She termed Hindenburg’s allegations as an attempt at “character assassination” following the regulator’s enforcement action and “show cause” notice to the U.S. based shortseller for violating Indian rules. A show cause notice signals an intention to take disciplinary action if satisfactory explanations are not provided.

If Ms. Buch made the requisite disclosures and met the compliance requirements, nothing more should be expected of her, said Hetal Dalal, chief operating officer at Institutional Investor Advisory Services, a proxy advisory firm in India.

“Nevertheless, the allegations made by Hindenburg have made her and SEBI vulnerable,” Ms. Dalal said. “A regulator must ring fence itself from the public onslaught.”

Demanding leader

Ms. Buch was appointed to the top post at SEBI in March 2022 after spending five years as a whole-time member, the second highest position at the regulator. She completes her three-year term in March next year.

A career banker, Ms. Buch spent her early working years at India’s second largest private lender, ICICI Bank, later heading its broking arm ICICI Securities. She also dabbled in private equity as part of the Singapore office of Greater Pacific Capital.

She is known by SEBI insiders as a demanding leader whose decisions are led by data. Ms. Buch is a frequent speaker at industry forums, armed with data-packed presentations.

She has faced pushback on a number of issues partly due to her style of operating but also because she has attempted to shake the status quo, according to industry insiders.

She has enforced stricter disclosures on corporations for related party transactions and on foreign investors for concentrated holdings in India stocks, public documents show.

She planned to lower fees for India’s $770.77 billion mutual fund industry, but the proposal was put on hold because of opposition by asset management firms, Reuters reported.

Ms. Buch was also forced to stagger the implementation of optional same day settlement for India’s stocks after opposition from foreign investors.

Most recently, she has proposed tighter rules to cool the frenzy in India’s options markets.

“Ever since Ms. Buch has taken charge as chairperson, the pace of regulatory changes has increased,” said Shriram Subramanian, founder of Ingovern Research Services, a proxy advisory firm in India.

Mr. Subramanian, however, said the changes had been done in a “consultative manner”.

Ms. Buch has faced opposition within SEBI too in her attempts to professionalise the organisation, including by raising performance targets, said five SEBI officials declining to be named as they were not authorised to speak to the media.

A few junior employees staged a ‘silent protest’ earlier this month against some of these HR policies. “There is a general sense of mistrust and discontent,” said one of the five officials.

An email sent to the SEBI spokesperson was not answered immediately. Messages and calls to Ms. Buch since Saturday were not answered. A message to her official email address went unanswered too.

Hindenburg’s allegations may prove to be Ms. Buch’s toughest challenge yet with the matter taking a political turn and opposition political parties calling for a parliamentary probe and asking her to resign.

“The integrity of SEBI, entrusted with safeguarding the wealth of small retail investors, has been gravely compromised by the allegations against its chairperson,” Indian opposition leader Rahul Gandhi said on social media platform X.

The government has been silent on the matter so far.

Ravi Shankar Prasad, spokesperson of the ruling Bharatiya Janata Party, said: “Instead of giving a response to the SEBI show cause notice, Hindenburg has issued this report, which is a baseless attack. SEBI and the family (of Buch) have responded, we don’t have anything to add to that.”

Jairam Ramesh. File
| Photo Credit: ANI

The Congress on October 19 urged the Securities and Exchange Board of India (SEBI) to stand firm and finish its investigation into the Adani matter in a timely manner, even as it reiterated that only a JPC probe can investigate the full scope of the issue.

In a post on X, Congress general secretary Jairam Ramesh cited a media report which claimed that the SEBI has asked the Organized Crime and Corruption Reporting Project (OCCRP) to give it access to key documents about the allegations of stock manipulation and accounting fraud against the Adani Group.

“Recently, the Organised Crime & Corruption Reporting Project (OCCRP) found clinching evidence that Adani associates were controlling opaque shell companies in overseas tax havens that had amassed huge stakes in Adani Group companies. All this was done in blatant violation of SEBI regulations,” Mr. Ramesh said. “Major global papers such as the Financial Times and the Guardian covered the story in detail,” he pointed out.

“The Adani Group and its minions in the BJP attempted to discredit OCCRP as ‘Soros-funded interests’. Now, it emerges that SEBI itself had approached OCCRP to get access to the documents proving that Adani was in fact indulging in round-tripping and money-laundering benami funds,” Mr. Ramesh said. “Will Adani apologists attack SEBI as conspiring with Soros? Does this not prove that SEBI is finally taking these disclosures seriously and attempting to fulfill its duty to the nation,” he said.

“We urge SEBI to stand firm and finish its investigation in a timely manner. However, we reiterate that only a JPC can investigate the full scope of the Adani MegaScam, including the close and enduring relationship, financial or otherwise, between the PM and his friend Adani,” Mr. Ramesh said.

The Opposition party has been questioning the financial dealings of billionaire Gautam Adani’s Group after the U.S. research firm Hindenburg alleged “irregularities” and charged it with stock price manipulation.

The Adani Group has denied all the allegations made in the Hindenburg report and claimed there had been no wrongdoing on its part.