SEBI Addresses Allegations Against Adani Group; Buch's Role Clarified

Allegations against the Adani Group have been thoroughly investigated, and Chairperson Madhabi Puri Buch has disclosed and recused herself when necessary, Sebi stated on Sunday. The capital markets regulator clarified that only one of the 26 aspects it was probing remains pending and is nearing completion.

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Investigation Details

Sebi revealed that over 100 summons, around 1,100 letters, and emails were issued to gather information. They examined over 300 documents containing approximately 12,000 pages. The Supreme Court noted in January that 24 out of 26 investigations against Adani had been completed, with another finished in March.

Hindenburg Research alleged that SEBI's reluctance to act against the Adani group might be due to Buch's stakes in offshore funds linked to the conglomerate. The short seller claimed Buch and her husband Dhaval invested in a fund allegedly used by Vinod Adani. It also highlighted Dhaval's association with private equity major Blackstone.

SEBI's Response to Allegations

Sebi emphasized that Buch made relevant disclosures and recused herself in matters involving potential conflicts of interest. The regulator assured that it has adequate internal mechanisms for addressing conflict of interest issues, including a disclosure framework and provision for recusal.

The regulator also addressed claims regarding Dhaval's association with Blackstone. Sebi stated that promoting REITs among various asset classes was not intended to benefit any single multinational financial conglomerate. It explained the process followed before drafting regulations.

Hindenburg Research's Gains

A few weeks ago, Sebi issued a show cause notice (SCN) to Hindenburg for potential violations. The SCN stated that Hindenburg and associated entities made gains of USD 22.25 million following the report against Adani Group in January 2023. A fourth of these profits, or USD 5.52 million, were to be shared with Hindenburg, with USD 4.14 million already shared by June 2023.

Sebi asked Hindenburg to explain why the unlawfully made profits should not be disgorged given the violations. Hindenburg shared the SCN on its website and questioned the reasons for its issuance.

SEBI's Commitment

Sebi reiterated its policy of refraining from commenting on ongoing investigations or enforcement matters. It added that the notice makes the reasons for its issuance clear and affirmed that proceedings are being handled according to established procedures and principles of natural justice.

The regulator highlighted its commitment to ensuring the integrity of India's capital markets through a robust regulatory framework aligned with global best practices. Sebi urged investors to remain calm and exercise due diligence before reacting to reports like Hindenburg Research's publication.

Sebi concluded by affirming its dedication to investor protection and maintaining market integrity while addressing all allegations transparently and efficiently.