SEBI chairman under pressure over allegations

US investor Hindenburg Research stirs up turmoil over alleged manipulation.

About a year and a half after Indian conglomerate Adani was hit with allegations of manipulation, US investor Hindenburg Research has once again stirred turmoil in local financial markets. India’s market regulator on Sunday urged investors to remain calm and do due diligence on a new report by short seller Hindenburg. He explained that Securities and Exchange Board (SEBI) Chairman Madhabi Puri Buch had previously invested in offshore funds also used by the Adani Group. However, SEBI said Buch had provided all the required information on securities and had withdrawn from areas where there might be conflicts of interest.

Buch herself said all disclosure rules were followed carefully. The fund’s investments mentioned by Hindenburg in 2015 were made in a private capacity, two years before she joined SEBI. Buch has been the SEBI head since 2022.

Adani Group includes 10 companies active in airports, ports, power and gas sectors. The Prime Minister said the group has benefited from the expansion of India’s infrastructure Narendra Modi Progress. India’s stock market has also been booming, attracting a lot of money. India’s leading index Nifty has risen nearly 12% in the past six months. India’s opposition on Saturday called on parliament to investigate the allegations.

Hindenburg to bring charges against Adani as early as 2023

Hindenburg Research had already caused considerable turmoil in the Indian financial markets in early 2023. At the time, short sellers accused the Adani Group of using offshore tax havens and manipulating share prices. Concerns were also raised about high debt levels and the valuations of seven Adani-listed companies. Adani denied the allegations. As a result, the Adani Group still lost $150 billion in market value. At the time, Hindenburg also announced a bet on falling prices and therefore held a short position in Adani companies.

Hindenburg cited whistleblower documents on Saturday night alleging that Bhuch and her husband held shares in a fund in which Vinod Adani, brother of Adani boss Gautam Adani, had invested heavily. The Adani Group announced on Sunday that its overseas investment structure was fully transparent. An Adani spokesman said the organization had no business relationship with “the persons or matters named in this orchestrated and deliberate attempt to tarnish our reputation.”

Bhuch and her husband Dawar Bhuch said their finances were an open book and they would not hesitate to release financial documents to any authority. “All required information has been provided to SEBI over the years,” it said. IPE-Plus Fund 1, the sub-fund in which Bhuch and her husband invested, is said to have neither direct nor indirect investment in Adani Group shares.

Hindenburg Research has made allegations of manipulation against other companies in the past, but they have mostly rejected them. (APA/Reuters)