The U.S based short seller, Hindenburg has hit again and this time it has taken down the most prestigious institution and India’s market regulator – SEBI – at the root of this fiasco is the chairperson of SEBI Madhabi Puri Buch and her husband, Dhaval Buch, who have been exposed for having stakes in “obscure offshore funds used in the Adani money siphoning scandal”.

The markets have reacted to the scandal with the Sensex falling 300 pts, and Nifty below 24,300; Adani Group stocks drop up to 7% in early trade.

Even as the duo, issued a statement accusing the short-seller of attempting a “character assassination”; in response, in a post on its X account, the short-seller said that the markets regulator boss’ response “raises numerous new critical questions,” and “includes several important admissions.”

And this is by far the most crucial statement made – for it does seem that there is a lot to this story that meets the eye!

Before we raise questions on who may be operating in the dark and must be investigated, here is what the Buchs have said to their defence and Hindenburg’s retort –

According to the statement by Buch, investment in the two funds was made on advice of Dhaval’s childhood friend, Anil Ahuja – the person which Hindenburg on Saturday identified as the founder and Chief Investment Officer (CIO) of the Mauritius-based IPE Plus Fund and who the Adani group also in its the statement on Sunday said was a nominee of 3i Investment Fund in Adani Power (2007-2008) and served as a director of Adani Enterprises for three terms spanning nine years ending in June 2017.

“Buch’s statement also claims that the two consulting companies she set up, including the Indian entity and the opaque Singaporean entity “became immediately dormant on her appointment with SEBI” in 2017, with her husband taking over starting in 2019.

Per its latest shareholding list as of March 31, 2024, Agora Advisory Limited (India), is still 99 per cent owned by Madhabi Buch, not her husband. This entity is currently active and generating consulting revenue,” Hindenburg said.

Also, she remained a 100 per cent shareholder of Agora Partners Singapore until March 16, 2022, per Singaporean records, owning it during her entire time as a SEBI Whole Time Member. “She only transferred her shares into her husband’s name two weeks after her appointment as SEBI chairperson,” it alleged.

Gautam Adani Steps In

Meanwhile, Gautam Adani has also jumped into the fray and has stated “The Adani Group has absolutely no commercial relationship with the individuals or matters mentioned in this calculated deliberate effort to malign our standing. We remain steadfastly committed to transparency and compliance with all legal and regulatory requirements,” the conglomerate said reacting to the latest Hindenburg report.

The Adani Group on Sunday denied reports of US short-seller Hindenburg Research which alleged SEBI chairperson Madhabi Puri Buch’s involvement in the obscure offshore entities in the siphoning case.

“The latest allegations by Hindenburg are malicious, mischievous and manipulative selections of publicly available information to arrive at pre-determined conclusions for personal profiteering with wanton disregard for facts and the law. We completely reject these allegations against the Adani Group which are a recycling of discredited claims that have been thoroughly investigated, proven to be baseless and already dismissed by the Hon’ble Supreme Court in January 2024,” the Adani Group said.

Under The Lens

Now we come to the critical parts –

1) Why does the integrity of financial regulators matter?

2) Why is it imperative that those who govern our financial markets remain impartial and above reproach?

These questions become more pressing when we consider recent allegations surrounding SEBI Chairperson Madhabi Puri and other key members of the board.

—But are we looking deep enough?

It is time to ask the hard questions about Uday Kotak and Cyril Shroff’s involvement in SEBI.

Uday Kotak, Case of Conflict?
Should Uday Kotak, one of India’s most powerful bankers, be allowed to influence regulatory decisions that could impact his own institution?

As the head of Kotak Mahindra Bank, Kotak’s reach into corporate India is vast. Recently, his bank has come under scrutiny for its alleged links to the Adani Group, a conglomerate currently embroiled in significant controversy.

1) How can we be sure that Kotak’s involvement in SEBI’s decision-making process is unbiased?

2) Given his deep entrenchment in corporate circles, shouldn’t his role on SEBI’s board be carefully examined to ensure that no conflicts of interest are at play?

3) Is it enough to assume that Kotak can separate his roles as a corporate leader and a regulator, or should we demand greater transparency and accountability?

Cyril Shroff, A Potential Conflict of Interest?

And what about Cyril Shroff, a legal heavyweight and Managing Partner of Cyril Amarchand Mangaldas?

His firm’s longstanding ties to the Adani Group, coupled with his daughter’s marriage to Karan Adani, the son of Gautam Adani, bring forth serious concerns.

1) Is it possible for Shroff to remain impartial in his regulatory duties when his personal and professional life is so closely intertwined with one of India’s most powerful conglomerates?

2) As a member of SEBI’s board, can Shroff truly maintain the objectivity required to make decisions that could impact the Adani Group or other corporate giants with whom he has close ties?

3) Or is his presence on the board a glaring conflict of interest that undermines public trust in the regulatory system?

The Most Important Point, Transparency in Regulatory Oversight

Why is transparency so crucial in regulatory oversight?
Because the stakes are incredibly high!

SEBI’s credibility is already being questioned, and any appearance of bias or conflict of interest could further erode public trust in India’s financial markets.

As the regulatory body faces allegations of shielding certain corporate interests, isn’t it essential that we investigate the roles and connections of all its key members?

Shouldn’t we demand a regulatory environment where decisions are made based solely on the merits, free from external influences that could skew market dynamics?

The Last Bit, The allegations against Madhabi Puri should not be the end of the story but rather the beginning of a much-needed inquiry into the entire SEBI board.

Why stop at Puri when there are other members whose roles and connections raise legitimate concerns?

The potential conflicts of interest involving Uday Kotak and Cyril Shroff must be thoroughly examined if we are to restore confidence in the regulatory process.

The financial markets and the public deserve nothing less than full transparency and accountability from those entrusted with safeguarding the integrity of our financial system.

Isn’t it time we put these key figures under the lens and demand answers to the questions that could shape the future of India’s financial position?