Hindenburg Research says Sebi Chairperson’s response to its report includes several important admissions, raises numerous new critical questions

After Sebi Chairperson Madhabi Puri Buch and her husband Dhaval Buch released a detailed, 15-point statement in response to Hindenburg Research's allegations, the US-based short seller took to microblogging site X (formerly Twitter) to say that their response to its report includes "several important admissions and raises numerous new critical questions".  

The latest of allegations by the US-based firm came in the late hours on Saturday, when Hindenburg Research, citing whistleblower documents, claimed Sebi chairperson Madhabi Puri Buch and her husband Dhaval Buch's connections with the alleged money siphoning, fraud, and financial irregularities by the Adani group. The husband-wife duo categorically denied the charges, first releasing a short statement immediately followed by a detailed, 15-point joint statement on Sunday.

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Hindenburg Research is attempting to attack Sebi's credibility and indulging in attempted character assassination of its chairperson, wrote the Buchs, having already described the allegations as "baseless" and "devoid of any truth" in a shorter statement immediately after the short seller released its report on its website.

Here are the 15 points mentioned in the latest statement released by the Buchs:  

• Madhabi is an alumnus of IIM Ahmedabad and has had a corporate career of over two decades in banking and financial services, largely in the ICICI Group. 
• Dhaval Buch is an alumnus of IIT Delhi and has had a corporate career of 35  years in Hindustan Unilever Limited in India and then in Unilever globally as part of its senior management team. During this long period, Madhabi and Dhaval  have accrued their savings through their salaries, bonuses and stock options. Insinuations about their net worth and investments referencing Madhabi’s current government salary are malicious and motivated.
• From 2010 to 2019, Dhaval lived and worked in London and in Singapore  – both with Unilever. 
• From 2011 to March 2017, Madhabi lived and worked from Singapore, initially as an employee of a Private Equity firm and subsequently as a consultant.
• The investment in the fund referred to in the Hindenburg report was made in 2015 when they were both private citizens living in Singapore and almost two years before Madhabi joined SEBI, even as a Whole Time Member. 
• The decision to invest in this fund was because the Chief Investment Officer, Mr Anil Ahuja, is 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 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. 
• As confirmed by Mr. Ahuja, at no point in time did the fund invest in any bond, equity, or derivative of any Adani group company.
• Dhaval’s appointment, in 2019, as Senior Advisor to Blackstone Private Equity was on account of his deep expertise in Supply Chain management. Thus his appointment pre-dates Madhabi’s appointment as SEBI Chairperson. This appointment has been in the public domain ever since. At no time has Dhaval been associated with the Real Estate side of Blackstone.
• On his appointment, the Blackstone Group was immediately added to Madhabi’s recusal list maintained with SEBI. 
• Over the last two years, SEBI has issued more than 300 circulars (including 'Ease of Doing Business' initiatives in line with the developmental mandate of SEBI) across the entire market ecosystem. All regulations of SEBI are approved by its Board (and not by its Chairperson) after extensive public consultation. Insinuations that a handful of these matters related to the REIT industry were favours to any specific party are malicious and motivated.
• The two consulting companies set up by Madhabi during her stay in Singapore, one in India and one in Singapore, became immediately dormant on her appointment with SEBI. These companies (and her shareholding in them) were explicitly part of her disclosures to SEBI.
• After Dhaval retired from Unilever in 2019, he started his own consultancy practice through these companies. Dhaval’s deep expertise in Supply Chain allowed him to work with prominent clients in the Indian industry. Thus, linking accruals in these companies to Madhabi’s current government salary is malicious.
• When the shareholding of the Singapore entity moved to Dhaval, this was once again disclosed, not just to SEBI, but also to the Singapore authorities and the Indian tax authorities.
• SEBI has strong institutional mechanisms of disclosure and recusal norms as per the code of conduct applicable to its officers. Accordingly, all disclosures and recusals have been diligently followed, including disclosures of all securities held or subsequently transferred.
• Hindenburg has been served a show cause notice for a variety of violations in India. It is unfortunate that instead of replying to the Show Cause Notice, they have chosen to attack the credibility of the SEBI and attempt character assassination of the SEBI Chairperson.