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.”

Seven out of the 10 listed firms of Adani group have received show cause notices from the Securities and Exchange Board of India (SEBI) for alleged violation of related party transactions and non-compliance with listing regulations, the companies said in their regulatory filings to the stock exchanges.

While group’s flagship Adani Enterprises Ltd, renewable energy firm Adani Green Energy Ltd (AGEL) and city gas distributor Adani Total Gas Ltd said SEBI sent notices of their parent or holding company controlled by conglomerate’s chairman Gautam Adani, ports company Adani Ports & Special Economic Zone, Adani Power, electricity transmission firm Adani Energy Solutions, and commodities firm Adani Wilmar said they have received SEBI notices.

Making the disclosure as part of notes to their respective January-March quarter and 2023-24 financial results statements, all the firms in almost identical statements said there is no material non-compliance with applicable laws and regulations and no material consequential effect.

However, auditors of the companies, except those for Adani Green Energy, Adani Total Gas Ltd and Adani Wilmar, issued a qualified opinion on the financial statements, implying that the outcome of the SEBI investigation may have a bearing on the financial statements in the future.

The SEBI notices are part of a probe that followed U.S. short-seller Hindenburg Research making damning allegations of corporate fraud and stock price manipulation against the Adani Group in January 2023. Though Adani vehemently denied all allegations, the report triggered a stock rout that wiped out about $150 billion of the group’s market value at its lowest point.

Most of the group stocks have bounced back as the ports-to-energy conglomerate plotted a comeback strategy.

A show cause notice is not an indictment and seeks an explanation from entities as to why legal action should not be taken against them.

AGEL in the filing on Friday said a short-seller’s report (SSR) made certain allegations against some of the Adani Group companies.

The matter went to the Supreme Court (SC), which observed that SEBI was investigating the matter while also constituting an Expert Committee to investigate as well as suggest measures to strengthen existing laws and regulations.

The Expert Committee in its May 6, 2023, report found “no regulatory failure in respect of applicable laws and regulations,” AGEL said. “The SEBI also concluded its investigations in 22 of the 24 matters as per the status report dated August 25, 2023, to the SC.” On January 3, 2024, the SC disposed of all matters in various petitions, including those relating to separate independent investigations relating to the allegations in the SSR. Further, the SC directed SEBI to complete the pending two investigations, preferably within three months, and take its investigations (including 22 already completed) to their logical conclusion in accordance with the law.

“During the quarter ended March 31, 2024, the holding company has received a show cause notice from the SEBI relating to validity of Peer Review Certificate (PRC) of one of joint auditors in earlier financial years, which the holding company has responded to,” it said.

Adani Enterprises Ltd (AEL) on Thursday stated that it has received the notices from SEBI alleging non-compliance with provisions of the Listing Agreement and LODR Regulations pertaining to related party transactions in respect of certain transactions with third parties and validity of peer review certificates of statutory auditors with respect to earlier years.

It, however, did not disclose the nature of the allegations.

AGEL termed the notices as “technical in nature” that have “no material consequential effects on the relevant financial statements, while AEL said, “there is no material consequential effect of above show cause notices to relevant financial statements and no material non-compliance of applicable laws and regulations.” All the Adani group firms stated that in April 2023, the parent company had undertaken a review of transactions referred in SSR through an independent assessment by a law firm, which confirmed “that (a) none of the alleged related parties mentioned in the SSR were related parties to the Parent Company or its subsidiaries, under applicable frameworks; and (b) the Parent Company (and the Group) is in compliance with the requirements of applicable laws and regulations.”

“Subsequent to the SC order dated January 3, 2024, to uphold the principles of good governance, the Adani Group has also initiated an independent legal and accounting review of the allegations in the SSR and other allegations (including any allegations related to the Group) to reassert compliance of applicable laws and regulations. Such independent review also did not identify any non-compliances or irregularities by the Group, and it has noted on record, the results of this review,” AGEL said.

Based on the above independent assessment, the SC order and the fact that there are no pending regulatory or adjudicatory proceedings as of date, except the one mentioned in the SEBI notice, the management concludes that there is no material non-compliance with applicable laws and regulations and there are no consequences of the allegations mentioned in the SSR and other allegations on the group, the firms said, adding that accordingly, the financial statements do not carry any adjustments in this regard.

APSEZ said show cause notices were received from SEBI alleging non-compliance of provisions pertaining to related party transactions with regard to the transactions entered in the earlier years with certain parties and not recalling security deposits against terminated contracts leading to not using the funds for the company’s core business purposes.

The firm said it has in its replies to SEBI, denied the charges in its entirety on grounds that these transactions were in full compliance with the prevailing laws and regulations.