Anika Begay
In this illustrative photo taken in Krakow, Poland, on February 2, 2023, the Hindenburg Research website is displayed on a laptop screen and the Adani logo is displayed on a phone screen.
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In a new report published on Saturday, US short-selling firm Hindenburg Research said that the chairman of India’s market regulator, Madhabi Puri Buch, had previously invested in some offshore funds also used by the Adani group.
Citing whistleblower documents, Hindenburg said Buch and her husband held shares in an offshore fund in which a significant amount of money had been invested by associates of Vinod Adani, brother of Gautam Adani, chairman of the Adani group of companies.
Buch rejected the report’s allegations as unfounded.
Buch said Sunday that all disclosure and recusal requirements had been diligently complied with. He added that the investments in the fund referred to in the Hindenburg report were made in 2015 in a private capacity, two years before joining SEBI.
India’s markets regulator on Sunday asked investors to remain calm and exercise due diligence before reacting to reports like Hindenburg’s.
The regulator said that the allegations leveled by Hindenburg against the Adani group were duly investigated by SEBI and that 23 of the 24 investigations were completed by March 2024.
In January 2023, Hindenburg released a report exposing the Adani Group’s misuse of tax havens and stock manipulation, triggering a $150 billion sell-off in the conglomerate’s shares despite its denials of wrongdoing. The stock has since recovered somewhat.
The 2023 report also prompted an investigation by the country’s market regulator, the Securities and Exchange Board of India (SEBI), which is ongoing. In May, six Adani group companies said they had received notices from SEBI alleging violations of Indian stock market rules.
In parallel with the Adani Group probe, SEBI issued a “communication” notice to Hindenburg Research, alleging that the short seller had violated the country’s rules by arranging a short bet using non-public information.
Hindenburg Research called the allegations “nonsense” in a note posted on its website in July, which also made public the regulator’s notification.
In its latest report, Hindenburg attempts to establish a connection between the offshore funds that traded Adani Group shares and the personal investments of Buch and her husband.
The Bermuda-based Global Opportunities Fund, which a Financial Times investigation has found was used by entities linked to the Adani group to trade shares in group companies, is said to have had underfunding.
Buch and her husband were investors in one of those subfunds in 2015, Hindenburg said, citing whistleblower documents.
In 2017, before Buch was appointed full-time member, the second-highest-ranking post at the Securities and Exchange Board of India (SEBI), her husband asked to be the sole manager of the account, Hindenburg said, citing documents from the whistleblower.
Subsequently, in 2022, she was appointed head of the regulatory body.
“We believe our findings raise questions that deserve further investigation. We welcome greater transparency,” Hindenburg said.
