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Head Buch made disclosures on holdings - SEBI on Hindenburg charges

Informist, Sunday, Aug 11, 2024

MUMBAI - The Securities and Exchange Board of India today said its Chairperson Madhabi Puri Buch had made disclosures from time to time of her "holdings in securities and their transfers." SEBI's statement comes in response to allegations by the US-based firm Hindenburg Research that said the SEBI chief and her husband Dhaval Buch were invested in an offshore fund in which a company controlled by Vinod Adani, brother of Adani Group Chairman Gautam Adani, had also invested.

The US-based short-seller Saturday alleged that the Buchs had invested in IPE Plus Fund 1, a sub-account of Global Dynamic Opportunities Fund where a Vinod Adani-controlled company had invested. Gautam Adani's elder brother Vinod Adani is a former director of Adani Enterprises and other Adani Group companies.

Hindenburg Research alleged that Global Dynamic Opportunities Fund and its sub-accounts were among the foreign fund conduits used to invest promoter funds in shares of listed Adani Group entities in order to bypass the minimum public shareholding requirement of 25% for listed companies. It further said that the founder and chief investment officer of IPE Plus Fund 1, Anil Ahuja, was at that time a director of Adani Enterprises.

Hindenburg Research said Dhaval Buch converted the joint account in IPE Plus Fund 1 to a single account in his own name on Mar 22, 2017. On Apr 5, 2017, Madhabi Puri Buch joined SEBI as a whole-time member. The US firm said that on Feb 25, 2018, when Buch was the whole-time member of SEBI, she personally sent an email to the fund seeking redemption of her husband's investment in it.

In response to the insinuation of impropriety, the Buchs, in a joint statement today, said in their personal capacity that "the investment in the fund referred to in the Hindenburg report was made in 2015 when they were both private citizens living in Singapore." The Buchs said that they invested in the fund because Ahuja 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 Buchs further said "the fact that these were the drivers of the investment decision is borne out by the fact that when, in 2018, Mr Ahuja left his position as CIO of the fund, we redeemed the investment in that fund."

Hindenburg Research also alleged that from April 2017 to March 2022 when Buch was first the whole-time member and later the chairperson at SEBI, she had a 100% stake in a Singapore-based consulting firm Agora Partners. This stake, it alleged, was transferred to her husband on Mar 16, 2022, two weeks after taking over as SEBI chief. With regard to this allegation, the Buchs said "when the shareholding of the Singapore entity moved to Dhaval, this was once again disclosed...to SEBI."

In its own official statement, the market regulator responded to another allegation by Hindenburg Research that during Dhaval Buch's tenure as advisor to global equity investor firm Blackstone that had large investments in real estate investment trusts, SEBI proposed and facilitated major changes in REIT regulations, including board nomination rights to unit-holders, that allowed unit-holders like Blackstone to nominate directors.

The US firm also alleged that as SEBI chairperson, Madhabi Buch was actively promoting REITs as her favourite asset class and urged investors to look positively at them without clarifying "that Blackstone, who her husband advises, stands to gain significantly from the asset class."

SEBI said this claim was inappropriate because changes to any regulations were effected only after seeking and receiving "inputs and feedback of the industry, investors, intermediaries, relevant advisory committee and the public at large."

Earlier today, the Adani Group said Hindenburg's allegations "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." End


Reported by Rajesh Gajra

Informist Media Tel +91 (22) 6985-4000

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© Informist Media Pvt. Ltd. 2024. All rights reserved.

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