Hindenburg Research’s Claims
US-based short seller Hindenburg Research has accused SEBI Chairperson Madhabi Puri Buch and her husband, Dhaval Buch, of holding undisclosed investments in offshore funds in Bermuda and Mauritius. These funds are allegedly linked to Vinod Adani, brother of Adani Group chairman Gautam Adani, and are said to have been used to round-trip funds and inflate stock prices.
Impact on Investor Confidence
Eminent business and tech analyst Daniel Geltrude expressed concern that these allegations could undermine investor confidence in India’s markets. He suggested that if the SEBI chairperson is indeed linked to these offshore investments, it could create skepticism among investors, potentially leading to a trust deficit in the market ecosystem.
Response from SEBI and AMFI
Madhabi Puri Buch and her husband issued a detailed statement denying the allegations, stating that the investments were made in 2015 when they were private citizens in Singapore, before Buch’s appointment as a whole-time member of SEBI in 2017. They asserted that the funds became dormant upon her appointment to SEBI.
The Securities and Exchange Board of India (SEBI) advised investors to remain calm and exercise due diligence in response to such reports. The Association of Mutual Funds in India (AMFI) supported Buch, condemning Hindenburg’s allegations as attempts to undermine Buch’s contributions and destabilize the market.
Market Reaction
Following the allegations, all ten Adani group stocks experienced significant declines in early trading. Key losses included:
- Adani Energy Solutions: Down 17%
- Adani Total Gas: Down 13.39%
- NDTV: Down 11%
- Adani Power: Down 10.94%
- Adani Green Energy: Down 6.96%
- Adani Wilmar: Down 6.49%
- Adani Enterprises: Down 5.43%
- Adani Ports: Down 4.95%
- Ambuja Cements: Down 2.53%
- ACC: Down 2.42%
The broader market also felt the impact, with the BSE Sensex dropping 479.78 points to 79,226.13, and the NSE Nifty falling 155.4 points to 24,212.10.
Broader Implications
Hindenburg Research argued that Buch’s involvement with funds related to the Adani Group poses a conflict of interest, given SEBI’s role in investigating such investments. This situation underscores the complexities and potential conflicts that can arise when regulatory figures are alleged to have connections to major market players.
