File picture of SEBI Chairperson Madhabi Puri Buch
| Photo Credit: PTI

The Public Accounts Committee (PAC) of Parliament has decided to review the functioning of top regulatory authorities in the country and has called heads of SEBI and TRAI for deposition on October 24.

Top officials of the Ministry of Finance, (Department of Economic Affairs) and Ministry of Communications have also been asked to appear before the key parliamentary panel, with sources saying representatives of the Securities and Exchange Board of India (SEBI) chairperson Madhabi Puri Buch and Telecom Regulatory Authority of India (TRAI) chairperson Anil Kumar Lahoti are likely to appear before the panel.

ALSO READ: Madhabi Puri Buch | The regulator at the centre of a storm 

Sources said the unstated convention in parliamentary practice is that chiefs of institutions have to attend parliamentary panel briefings whenever summoned.

The meeting of the key parliamentary panel comes amid a major row over allegations made by U.S. research body Hindenburg against SEBI chairperson Madhabi Puri Buch and her husband Dhaval Buch over her alleged links with the Adani Group.

“Briefing by Audit followed by Oral evidence of the representatives of Ministry of Finance (Department of Economic Affairs) and Securities and Exchange Board of India (SEBI) on the subject, ‘Performance Review of Regulatory Bodies established by Act of Parliament’,” the official agenda for the October 24 meeting of the PAC said.

“Oral evidence of the representatives of the Ministry of Communications, Department of Telecommunications and Telecom Regulatory Authority of India on the subject, ‘Performance Review of Regulatory Bodies established by Act of Parliament’,” it also said.

The Congress had earlier in August staged a nationwide protest over allegations by Hindenburg against SEBI chief Madhabi Puri Buch and her husband Dhaval Buch, who have denied any wrongdoing.

The Congress also sought her resignation as SEBI chief.

Hindenburg in one of its reports had alleged that the Buchs owned stakes in offshore entities linked to Adani Group’s alleged financial irregularities. Hindenburg also said that 18 months after its “damning” report on Adani “SEBI has exhibited lack of interest in charges against Adani”.

The Adani Group and the Buch duo have denied the allegations.

Madhabi Puri Buch. File
| Photo Credit: Reuters

Hindenburg Research alleged Securities and Exchange Board of India (SEBI) chairperson Madhabi Puri Buch of not responding to “emerging issues”, a day after the Congress alleged her of having 99% stake in a consultancy company that provided services to entities regulated by SEBI.

Foreign investors worried about market integrity, says Congress, seeking independent probe into SEBI

In its post on X, the short seller research firm said that Agora Advisory, a consultancy firm that it said was owned by Ms. Buch, provided services to listed entities including Mahindra and Mahindra, ICICI Bank, Dr. Reddy’s and Pidilite, while she was serving as a whole time member in SEBI. Similar allegations were levelled by the Congress on Tuesday (September 10, 2024) in a press briefing, which Dr. Reddy’s, Pidilite and Mahindra and Mahindra had denied in regulatory filings.

“These allegations apply to Ms. Buch’s Indian consulting entity with no details thus far on Ms. Buch’s Singapore-based consulting entity. Ms. Buch has maintained her complete silence for weeks on all of the emerging issues” Hindenburg said on September 11, in its post on X.

Also Read | On SEBI chairperson’s conflicts of interests

The Congress had claimed that Agora Advisory had continued to provide services to listed entities, contrary to an earlier statement by Ms. Buch saying the company had become dormant after she took up her role at SEBI.

In addition to this, the Congress also claimed that Ms. Buch’s spouse Dhaval Buch, was drawing income from Mahindra and Mahindra after his retirement. Mahindra and Mahindra denied these allegations.

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.”