Timeline: Sebi Chair Madhabi Buch Faces Hindenburg Allegations, Employee Protests, Conflict Of Interest Claims

The Securities and Exchange Board of India (Sebi) and its Chairperson, Madhabi Puri Buch, are currently facing intense scrutiny following a series of allegations from multiple fronts. The controversy first surfaced when Hindenburg Research accused Buch of financial impropriety linked to her investments in offshore funds associated with the Adani Group, a conglomerate under Sebi investigation. These allegations were compounded by internal unrest, as Sebi employees accused the leadership of fostering a toxic work culture. As pressure mounts, Sebi’s leadership has been forced to defend its actions and policies, while questions about transparency and conflict of interest.

Hindenburg Research Drops Explosive Allegations
On 10 August 2024, Hindenburg Research stirred India’s financial markets by releasing a report accusing Sebi Chairperson Madhabi Puri Buch and her husband, Dhaval Buch, of financial misconduct. The report claimed that the Buchs had invested in offshore funds linked to the Adani Group, which was under investigation by Sebi for alleged stock manipulation.

The funds, according to Hindenburg, were based in tax havens such as Bermuda and Mauritius and were allegedly controlled by Vinod Adani, brother of Adani Group founder Gautam Adani. Hindenburg stated that Madhabi Buch and her husband Dhaval had invested in these funds well before her appointment at Sebi, raising concerns about transparency and impartiality in Sebi’s probe of the Adani Group.

The report further alleged that the Buchs had invested in IPE Plus Fund 1 in Singapore in 2015. Documents showed that Dhaval Buch, weeks before his wife’s Sebi appointment in 2017, wrote to a Mauritius-based fund administrator requesting sole control over the couple’s accounts. Hindenburg also alleged that Madhabi Buch, while serving as Sebi’s Whole-time Member in 2018, used her personal Gmail account to communicate with India Infoline, seeking to redeem units from the Global Dynamic Opportunities Fund.

Buch Family Strongly Denies Allegations
A day after the report was made public, Madhabi Puri Buch and her husband released a joint statement denying Hindenburg’s claims, describing the allegations as “baseless and devoid of any truth.” The statement read, “Our life and finances are an open book. All disclosures required by Sebi have been furnished over the years. We have no hesitation in providing any and all financial documents to the appropriate authorities.”

The Buchs expressed disappointment that Hindenburg would “stop character assassination,” particularly after Sebi had previously taken enforcement action against the short-seller and issued a show-cause notice. 

Madhabi and Dhaval Buch issued a detailed rebuttal, refuting Hindenburg’s claims of their involvement with Adani-linked entities. They clarified that the investments cited by Hindenburg were made while they were private citizens in Singapore and had no connection to Adani Group. The Buchs stated, “We held no investments in Adani-related entities, and all our financial disclosures were in compliance with Sebi regulations.”

They also explained that Madhabi Buch had recused herself from any matters involving conflicts of interest during her tenure at Sebi. 

Sebi backed Buch’s statements, issuing a separate note stating that her recusal from sensitive matters, including those involving Blackstone (due to Dhaval Buch’s advisory role), was documented and adhered to. Sebi also asserted that it had “duly investigated” all allegations against the Adani Group independently and without any bias.

In a press release, Adani Group dismissed Hindenburg’s accusations as “recycled and baseless claims,” pointing out that similar allegations had been rejected by the Supreme Court Of India in January 2024.

Stock Market Reaction
As news of the Hindenburg allegations spread, Adani Group stocks initially dropped by 5-6 per cent during morning trading on 12 August . However, the stocks stabilised by the end of the trading day, with some shares showing mild gains. The market’s mixed response reflected a level of resilience within the Adani Group, despite the renewed focus on the conglomerate’s financial dealings.

Fresh Allegations Of Conflict Of Interest
On September 2, 2024, Congress spokesperson Pawan Khera introduced a new set of allegations against Sebi Chairperson Madhabi Puri Buch, this time concerning potential conflicts of interest during her tenure. Khera alleged that Buch had continued to receive income from ICICI Bank and Prudential while serving as Sebi’s Chairperson, violating Section 54 of Sebi’s conflict-of-interest rules.

“How can Sebi ensure impartial regulation when its head was receiving payments from private entities?” Khera questioned during a press conference in Delhi. He further claimed that Buch had received Rs 16 crore 80 lakh in salary from ICICI Bank between 2017 and 2024, as well as ESOPs worth Rs 22 lakh from ICICI Prudential.

ICICI Bank swiftly responded, issuing a statement clarifying that Buch had only received post-retirement benefits, stating, “ICICI Bank and its group companies have not paid any salary or granted any ESOPs to Ms. Buch post her retirement in 2013, other than her retiral benefits.”

Sebi Employee Protest Over Toxic Work Culture
Even as these external allegations emerged, Sebi faced internal turmoil. An anonymous letter, titled "Grievances Of Sebi Officers - A Call For Respect," surfaced in early August, detailing complaints from Sebi employees about a toxic work environment under Madhabi Buch’s leadership. The letter accused Buch of using “harsh and unprofessional language,” micromanaging teams, setting unrealistic targets, and promoting a culture of fear.

The letter noted, “Shouting, scolding, and public humiliation have become the norm in Sebi meetings, affecting mental health and work-life balance.” The employees further complained that Buch’s leadership style had led to mistrust and low morale, with many workers feeling afraid to voice their concerns.

In response, Sebi issued a statement acknowledging that the review meeting format had been changed and that the situation had been addressed. Sebi said, “The grievances appear to stem from attempts to shift accountability for underperformance, and we will continue our efforts to uphold high standards of performance within Sebi.”

Employees Demands And Sebi's Response
In addition to grievances about work culture, Sebi employees had raised concerns about the failure to implement a 55 per cent hike in house rent allowance (HRA), which had been set in 2023. Sebi responded by noting that officers were already receiving competitive compensation, with entry-level employees earning Rs 34 lakh annually, and that further demands would significantly increase the cost to the organisation.

The regulator also addressed complaints about Sebi’s automated Management Information System for Key Results Areas (KRAs), defending the system’s introduction as a means to increase transparency and accountability within the agency.

As allegations and grievances against Madhabi Puri Buch continue to emerge, her leadership at Sebi has come under heightened scrutiny. Between external accusations of financial impropriety from Hindenburg Research and Congress, and internal unrest among Sebi employees over toxic work culture, the pressure on Sebi’s Chairperson is mounting.

Sebi’s responses to these allegations have been strong, defending Buch’s actions and leadership, but questions of transparency, impartiality, and workplace ethics remain. The ongoing controversy puts Sebi’s reputation and Buch’s future in a delicate position as investigations and reviews continue.