After Adani, Hindenburg Targets SEBI Chief, She Calls Allegations Baseless, Character Assassination

Hindenburg targets SEBI chief: US short-seller Hindenburg Research has alleged that it suspects SEBI's unwillingness to act against Adani Group may be because of its head Madhabi Puri Buch had stakes in offshore funds linked to conglomerate - an allegation that SEBI head called "baseless" and an attempt of "character assassination".

Hindenburg alleged that Buch and her husband had undisclosed investments in obscure offshore funds in Bermuda and Mauritius, same entities allegedly used by Vid Adani - elder bror of group chairman Gautam Adani - to round-trip funds and inflate stock prices.

SEBI in October 2020 began a probe into shareholding structure of Adani Group companies after red flags were raised over high concentration of foreign holdings in conglomerate's listed companies. Investigation was launched to determine if foreign investors are genuine public shareholders or acting as fronts for promoters.

SEBI last year had told a Supreme Court-appointed panel that it was investigating 13 opaque offshore entities that held between 14 per cent and 20 per cent across five publicly traded stocks of conglomerate. It hasn't stated if two incomplete probes have since been completed, something which Hindenburg used to attack market regulator.

Madhabi and her husband Dhaval Buch in a joint statement strongly denied "baseless allegations and insinuations made in report".

same, y said, "are devoid of any truth".

"Our life and finances are an open book," y said. "It is unfortunate that Hindenburg Research against whom SEBI has taken an enforcement action and issued a show cause tice has chosen to attempt character assassination in response to same."

While statement did t talk on questions Hindenburg raised over SEBI probe, duo promised to come out with a detailed response.

Hindenburg on Saturday stated that Madhabi and her husband invested in offshore entities that were allegedly part of a fund structure mand by India Infoline and in which Vid Adani also had investments.

se investments reportedly date back to 2015, well before her appointment as a whole-time member of SEBI in 2017 and subsequent elevation as chairperson in March 2022.

It said Bermuda-based Global Opportunities Fund, which allegedly was used by entities connected to Adani Group to trade in shares of group companies, had sub-funds. Buch and her husband were investors in one of se sub-funds in 2015.

Citing "whistleblower documents", Hindenburg said, "Madhabi Buch, current chairperson of SEBI, and her husband had stakes in both obscure offshore funds used in Adani money siphoning scandal."

SEBI, it claimed, has "shown a surprising lack of interest in Adani's alleged undisclosed web of Mauritius and offshore shell entities."

Buchs may have first opened ir account with IPE Plus Fund 1 on June 5, 2015 in Singapore. IPE fund is a small offshore Mauritius fund set up by Vid Adani through India Infoline (IIFL), a wealth manment firm with ties to Wirecard embezzlement scandal.

"Vid...used this structure to invest in Indian markets with funds allegedly siphoned from over invoicing of power equipment to Adani Group," claimed Hindenburg.

Latching on to Hindenburg allegations, Congress said revelations only reinforced its demand for setting up a "joint parliamentary committee to investigate full scope of Adani mega scam" while Trinamool Congress said SEBI chairperson must resign.

In January last year, Hindenburg accused Adani Group of pulling " largest con in corporate history" by using a web of companies in tax havens to inflate its revenue and manipulate stock prices, even as debt piled up.

After Hindenburg report, SC asked SEBI to complete its investigation and set up a separate expert panel to look into regulatory lapses. panel did t give any adverse report on Adani and apex court too stated that or probe or than one being done by SEBI was required.

On June 26 this year, SEBI in a show cause tice charged Hindenburg of "deliberately sensationalising and distorting certain facts" as well as working with a New York hedge fund to make its bet.

Hindenburg had responded to that saying it made just USD 4.1 million from its declared positions on Adani stocks and criticised regulator for t focusing its investigation into January 2023 report "providing evidence" of group creating "a vast network of offshore shell entities" and moving billions of dollars "surreptitiously" into and out of Adani public and private entities.

Gautam Adani, who was world's third-richest man before Hindenburg, in an epic comeback strategy raised USD 15 billion in equity and debt, sold some assets, repaid loans that was raised pledging shares, reined in expenses and refocused energies on core business.

Adani is w ranked 12th richest in world. group has also made some acquisitions, buying cement company Sanghi Industries and news ncy IANS.

Hindenburg on Saturday alleged that just weeks before Buch's appointment to SEBI, her husband requested transfer of ir investments into his sole control, potentially to avoid any scrutiny related to her new regulatory role.

couple's investments were reportedly funnelled through a complex, multi-layered offshore structure, raising questions about ir legitimacy and purpose.

On March 22, 2017, just weeks ahead of Buch's appointment as SEBI whole-time member, Dhaval wrote to Mauritius fund administrator Trident Trust. That communication was regarding his and his wife's investment in Global Dynamic Opportunities Fund (GDOF), US firm alleged.

"In letter, Dhaval requested to "be sole person authorised to operate Accounts", seemingly moving assets out of his wife's name ahead of politically sensitive appointment," Hindenburg alleged.

Dhaval is a senior advisor at Blackstone and at Alvarez & Marsal. He also serves as a n-executive director on Board of Gildan.