On Saturday (10th August), controversial ‘Hindenburg Research’ published a report targeting Securities and Exchange Board of India (SEBI) chief Madhabi Buch.
The American short-seller, known for wiping out more than $100 billion in wealth from the Indian markets last year, has now shifted its focus to SEBI – the regulatory body for securities and commodity markets in India.
‘Hindenburg Research’ alleged that SEBI chief Madhabi Buch and her husband Dhaval Buch had stakes in an ‘obscure’ offshore entity linked to Vinod Adani, the brother of Indian businessman Gautam Adani.
NEW FROM US:
— Hindenburg Research (@HindenburgRes) August 10, 2024
Whistleblower Documents Reveal SEBI’s Chairperson Had Stake In Obscure Offshore Entities Used In Adani Money Siphoning Scandalhttps://t.co/3ULOLxxhkU
While accusing the SEBI chief of conflict of interest, the controversial short-seller claimed, “What we hadn’t realised: 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.”
Hindenburg Research stated that its unsubstantiated claims were based on documents provided by one whistleblower and investigation authorities.
“If SEBI really wanted to find the offshore fund holders, perhaps the SEBI chairperson could have started by looking in the mirror. We find it unsurprising that SEBI was reluctant to follow a trail that may have led to its own chairperson,” it continued.
When Hindenburg Research targeted the Adani Group
Hindenburg Research cast aspersions on the integrity of SEBI, its chief and suggested a collusion of sorts with Adani Group for ‘inaction’ against the Indian conglomerate.
For the unversed, the short-seller had initially targeted Gautam Adani in January 2023 and made baseless claims of ‘stock manipulation’ and ‘fraud’ against his companies. However, the nefarious attempt by ‘Hindenburg Research’ failed to yield any result.
SEBI had accused the American company of illicit profiteering after it shared its hit-job report on Adani Group with a China-linked hedge fund in advance. Importantly, the Supreme Court had also backed SEBI after it gave a clean chit to the Indian conglomerate.
Short seller claims ‘conflict of interest’ for loss-making funds held retrospectively
‘Hindenburg Research’ has been aghast ever since its outlandish allegations last year failed to implicate Adani Group of wrongdoing.
As such, the American short seller took it upon itself to target SEBI, investigating claims of ‘fraud’ and ‘stock manipulation’ against the Indian conglomerate.
It has accused SEBI chief Madhabi Buch and her husband Dhaval Buch of “stakes in both obscure offshore funds used in the Adani Money siphoning scandal.”
The American short seller claimed that Gautam Adani’s brother, Vinod, invested in a Bermuda-based fund named ‘Global Dynamic Opportunities Fund in 2013, which then invested in a Mauritius-based offshore fund called ‘IPE Plus Fund.’
‘Hindenburg Research’ alleged that Madhabi Buch and her husband Dhaval Buch opened their account with ‘IPE Plus Fund 1’ in Singapore in 2015. It also claimed that the SEBI chief removed herself from this asset just before joining the Indian regulator body.
In 2018, the funds to the tune of $872,762.25 in ‘IPE Plus Fund 1’ were redeemed by Dhaval Buch. The transactions were facilitated by a wealth management firm called ‘Indian Infoline’.
‘Hindenburg Research’ used the erstwhile offshore fund holding of Madhabi Buch to suggest ‘laxity’ in investigations against Adani Group as SEBI chairperson.
There are two things to remember – She exited the portfolio before becoming part of the Indian regulator and funds associated with ‘IPE Plus Fund 1’ were redeemed by her husband (who was owner of the asset at that time) 5 years before the publication of the ‘Hindenburg Research’ report.
Not to forget that there was a net loss of 0.02%, according to documents shared by the American short seller. It is thus baffling to even suggest the possibility of a ‘conflict of interest’ for loss-making funds held retrospectively.
Bizarre attempt to portray ‘Adani-Ahuja-Buch’ nexus
The manner in which ‘Hindenburg Research’ established connections between Madhabi Buch and Vinod Adani is mind-boggling. The short-seller insinuated collusion between the two for investing in the same offshore fund.
If this wasn’t enough, it also sought to tarnish the reputation of well-known investment manager Anil Ahuja. He is the founder of the ‘IPE Plus Fund’, where Madhabi Buch and her husband had invested their wealth.
‘Hindenburg Research’ pointed out that he served on the Board of Adani Enterprises Limited to suggest an inherent connection of the Buchs with Adani Group.
In its malicious attempt, the short seller forgot to mention that Ahuja had served on the Board of several other companies in the past. The list includes Nimbus Communications Limited, HDFC Bank, HDFC Securities, Domino’s Pizza India Limited and MTR Foods.
Given his professional accomplishments, it is not surprising that Ahuja had served one of largest India’s conglomerates.
However, it did not stop the American short seller from hoodwinking about closed ties with Madhabi Buch, who was merely a customer of not the Adani Group but a company founder by another man who happened to serve on the Board of Adani Enterprises.
Investment advice ft. Hindenburg Research
‘Hindenburg Research’ went on to reprimand Madhabi Buch for diversifying her portfolio and not investing in Indian mutual funds, prior to her stint as SEBI chief.
“In brief, despite the existence of thousands of mainstream, reputable onshore Indian mutual fund products, an industry she now is responsible for regulating, documents show SEBI Chairperson Madhabi Buch and her husband had stakes in a multi-layered offshore fund structure with miniscule assets…” the short seller made bizarre assertions.
Based on its desperate attempt to establish connections frivolously, Hindenburg Research concluded, “We suspect SEBI’s unwillingness to take meaningful action against suspect offshore shareholders in the Adani Group may stem from Chairperson Madhabi Buch’s complicity in using the exact same funds used by Vinod Adani, brother of Gautam Adani.”
As evident from the above points mentioned, the conjectures, suppositions and surmises of the American short-seller about the incumbent SEBI chief do not prove anything and certainly not a conflict of interest.
