"Something big soon India" --
this tweet by US-based short seller firm Hindenburg Research on August 10th set the cats among pigeons, making many wonder who was in the bull's eye this time.
The last time the American short seller targeted India in January 2023, it had trained its guns at Adani Group, one of India's leading business conglomerates. Their latest announcement left many guessing which business house would be targeted this time.
But Hindenburg Research surprised everyone with its latest target, coming after Madhabi Puri Buch, the chief of India's market regulator, Securities and Exchange Board of India (SEBI). They accused her of having stakes in offshore funds linked to the Adani Group.
The US-based short seller stated and I quote, "The current SEBI Chairperson and her husband, Dhaval Buch, had hidden stakes in the exact same obscure offshore Bermuda and Mauritius funds, found in the same complex nested structure, used by Vinod Adani." – end of quote.
After making the allegations, Hindenburg Research concluded and I quote again, "We Do Not Think SEBI Can Be Trusted As An Objective Arbiter In The Adani Matter." – end of quote
However, the Buchs didn't take these allegations lying down. In a detailed statement, Madhabi and Dhaval Buch slammed Hindenburg Research's claims as 'baseless' and 'malicious.'
They clarified that their investments in offshore funds were made well before Madhabi joined SEBI.
They also emphasized that all necessary disclosures were made, and Madhabi recused herself from any SEBI decisions involving potential conflicts of interest.
SEBI also weighed in, backing its chief. The regulator confirmed that Madhabi Puri Buch made all relevant disclosures and recused herself from any decisions that could pose a conflict of interest.
SEBI reiterated that it has thoroughly investigated Hindenburg's allegations against Adani, and the last of its 26 investigations is nearing completion.
However, Hindenburg wasn't convinced. The firm responded by doubling down on their allegations, suggesting that Buch and her husband's financial dealings were deliberately concealed ahead of her appointment as SEBI chairperson. They even hinted at the possibility of Buch shielding Adani-linked entities from regulatory scrutiny.
The crossfire between Hindenburg Research and the SEBI chief had policy, business, and market circles abuzz. Some industry leaders slammed the American short-seller for what they see as an unjustified attack on SEBI's credibility, while others argue these allegations, if proven true, could have serious implications for India's regulatory framework.
Commenting on the new report by Hindenburg Research, Economic Affairs Secretary Ajay Seth said the regulators have already made a statement, as has SEBI chairperson Madhabi Puri Buch, and "the government had nothing further to add."
Meanwhile, The Association of Mutual Funds in India (AMFI) expressed support for SEBI chief Madhabi Puri Buch, accusing Hindenburg of seeking to "create a trust deficit in the market ecosystem".
The association also called the report "an attempt to undermine Buch's contributions to India's capital market."
Investment guru Vijay Kedia also slammed Hindenburg Research. He tweeted:
"Turns out, the Hindenburg wasn't so smart,
Its blackmail plan fell apart,
So now it's remembered, not for its threats,
But for going down in a fiery mess..."
Market expert Deepak Shenoy called the report sensational. He tweeted, "Thoda zyada ho gaya, i feel, basically they have gone into sensationalism. There is hardly any substance."
The latest allegations by Hindenburg Research also triggered a political war of words.
Congress leader Rahul Gandhi was quick to seize the moment, claiming that SEBI's integrity had been 'gravely compromised'.
The BJP, on the other hand, countered Gandhi's remarks, accusing him of politicising the issue to target Prime Minister Modi and the government.
So, where does this leave us? As SEBI continues its investigation into the Adani Group, the spotlight remains firmly on Madhabi Puri Buch.
While the Buchs and SEBI maintain that the allegations are unfounded, Hindenburg's persistence suggests this battle is far from over.
What are your thoughts? Is Hindenburg right to raise these concerns, or is this just another attempt to undermine India's financial regulators? Let us know in the comments below.
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