SEBI Chief Faces Conflict Of Interest Allegations Over Consultancy Earnings

Madhabi Puri Buch, the head of India's market regulator, the Securities and Exchange Board of India (SEBI), is under scrutiny after public documents revealed that she continued to earn revenue from a consultancy firm during her seven-year tenure at SEBI. The revelations have raised concerns about a potential breach of regulatory rules, according to a report by Reuters.

Hindenburg Research, a prominent U.S. short-seller, has accused Buch of having a conflict of interest in her investigations into the Adani Group, a conglomerate led by Gautam Adani. These allegations are linked to Buch's past investments and her ongoing consultancy activities. Hindenburg's allegations against the Adani Group, made in January last year, led to a significant drop in the share prices of Adani Enterprises and other group companies. Although the stocks later recovered, the matter has remained under investigation by SEBI.

In a statement issued on August 11, Buch firmly denied the conflict of interest allegations, describing them as an attempt at "character assassination."

Hindenburg Research’s latest report has further spotlighted two consultancy firms associated with Buch and her husband: Singapore-based Agora Partners and India-based Agora Advisory. According to documents from the Registrar of Companies analysed by Reuters, Agora Advisory Pvt Ltd, in which Buch holds a 99 per cent share, earned a revenue of 37.1 million rupees (USD 442,025) during her tenure at SEBI, raising questions about compliance with SEBI's regulations.

A 2008 SEBI policy explicitly prohibits officials from holding an office of profit or receiving salary or professional fees from other professional activities while in service. Buch has stated that the consultancy firms were fully disclosed to SEBI, and clarified that her husband utilised these firms for his consulting work following his retirement from Unilever in 2019.

The ongoing controversy has sparked a debate about the ethical responsibilities of regulatory officials and the need for stricter oversight to prevent potential conflicts of interest. As the investigation continues, the focus remains on ensuring transparency and maintaining trust in India's financial regulatory system.