Sebi Staff vs Madhabi Puri Buch: Agitated employees seek removal of 'false and misleading' press release

A section of SEBI's employees on Thursday demanded that the top brass of the capital market regulator delete a "false and misleading" press release immediately, along with issuing a public apology. This demand followed a press release issued by SEBI the previous day, which denied claims of an unprofessional work culture made by some of its employees. In a communication addressed to the SEBI board, the employees wrote that they "strongly condemn the tone and substance of the PR," which "attempts to undermine the genuine concerns of SEBI employees and distorts the truth to deflect from the real issues at hand."

"The achievements of SEBI are the result of collective efforts, not the work of a solitary leader. The leadership must take responsibility for the current state of affairs and work towards fostering a respectful and dignified work environment, rather than dismissing legitimate concerns with false and misleading statements. Therefore, we demand that the leadership withdraw the false and misleading PR immediately and issue a public apology," read the document dated September 5.

The September 4 press release, issued by the chairperson, "is not only misleading but riddled with factual inaccuracies," the employees claimed.

In their letter to the finance ministry dated August 6, the employees alleged that meetings at the institution often involved "shouting, scolding, and public humiliation," with leadership under SEBI Chairperson Madhabi Puri Buch allegedly using "harsh and unprofessional language" with team members.

The press release followed reports suggesting that around half of SEBI's 1,000 senior officers had flagged a toxic work culture to the finance ministry in August. SEBI stated that, in all such instances, the concerned officers were held accountable, given firm feedback, and corrective actions were taken.

Meanwhile, several SEBI employees gathered in protest against Chairperson Madhabi Puri Buch and the toxic work culture under the current leadership, describing it as a mock drill that would be followed up soon.

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'Misleading and factually incorrect statements'

"The PR was intended to exact vendetta against SEBI and its employees by the Chairperson and was meant to trivialize the concerns raised by SEBI employees in their letter dated August 6, 2024," the employees wrote.

"It should be noted that officers initiated this solidarity movement as a call for respect and dignity. It was at the Chairperson's insistence that HRD sought monetary demands from employees, not once but twice. That’s when officers sent the second letter addressing both monetary benefits and organizational issues. However, the PR falsely projects that employees were only seeking monetary benefits. The PR claims that this was part of the employees' strategy. Madam CP has trivialized employees' demands as 'monetary' to easily refute them and portray employees in a negative light. Furthermore, the PR is riddled with numerous factual inaccuracies, such as CTC of entry-level Grade officers, influence of external elements, etc.," they wrote.

Source of the leak

"The PR itself acknowledges that the leak did not originate from the employees. The letter was sent directly and solely to SEBI management. This fact highlights the deliberate attempt by management to distract from the real issues by suggesting otherwise," they added.

The employees also claimed that the leadership at SEBI, which has been in place for the last 2.5 years, still grapples with the very issues highlighted in the employees' communication. Buch took over as Chairperson of SEBI in March 2022, having previously served as a whole-time member of the regulator since April 2017.

"This speaks volumes about the efficacy and accountability of the current leadership. The PR clearly demonstrates the toxic work culture at SEBI and how one person is micromanaging every aspect of SEBI in the minutest way possible. This was never the case under previous leadership," the employees mentioned in their communication to the SEBI board.

'Buch has behavioural issues'

The employees alleged that SEBI leadership is well aware of the Chairperson's behavioural issues towards its staff.

Red Card & Yellow Card System?

The employees claimed that "everyone in SEBI who has attended any meeting with the Chairperson knows that a 'red card/yellow card' system was implemented by her."

An officer was assigned to warn her by raising a 'yellow card' during her emotional outbursts and a 'red card' when her emotional outbursts reached uncontrollable levels, as described by the employees.

"This system was a direct consequence of the lack of effective leadership skills and emotional control, as demonstrated by the issuance of the current PR," they wrote.

Imbalance of Power Within SEBI?

The public smear campaign against employees who genuinely raised internal grievances is both unwarranted and unbecoming of an organization of SEBI's stature, the employees claimed.

"Instead of addressing the matter internally, the leadership chose to issue a press release that publicly criticized its own employees, further escalating the situation. By choosing to air internal grievances publicly through this press release and resorting to mudslinging, the leadership portrays a guilty conscience and reflects an authoritarian approach. While SEBI leadership has the power to issue public statements, SEBI employees are bound by service regulations that prevent them from publicly defending themselves," they wrote.

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The Core of SEBI's Success Lies in the Collective Efforts of Its Staff

Describing SEBI as an organization "built on the dedication and hard work of its employees," the employees wrote: "Leadership may change, but the core of SEBI's success lies in the collective efforts of its employees, not the isolated actions of any single individual."

This is why it is "misleading and unfair" to attribute SEBI's achievements solely to the leadership while ignoring the invaluable contributions of its employees, they asserted.

The recent developments at SEBI come amid allegations of serious misconduct by SEBI Chairperson Madhabi Puri Buch, including claims of conflict of interest by US-based short-seller Hindenburg Research on August 10, which triggered concerns about the regulator’s credibility and calls for her removal.

Buch and her husband, Dhaval Buch, have categorically denied the charges, describing them as attempts at "character assassination."

The August 10 Hindenburg report accused Buch and her husband of previously investing in offshore funds used by the Adani Group, among other serious allegations.

Many financial experts, including foreign investors, have questioned SEBI's credibility under her leadership. In an interaction with Zee Business last month, former Finance Secretary SC Garg suggested that Buch should step down, as recent events are "not good for the reputation" of the country's market regulator. He also recommended that the government investigate the matter closely.