On Sunday, August 11, 2024, the Securities and Exchange Board of India (SEBI) issued a comprehensive statement addressing allegations made in a report by Hindenburg Research against its Chairperson, Madhabi Puri Buch. The report had raised concerns about potential conflicts of interest and questioned the integrity of SEBI's leadership. In response, SEBI provided detailed clarifications and urged investors to remain calm, emphasizing the importance of due diligence before reacting to such reports.
In its two-page statement, SEBI reiterated that Chairperson Buch has consistently made the required disclosures regarding her holdings and transfers of securities, as mandated by the regulatory framework. The regulator highlighted that Buch has also recused herself from any matters that could potentially involve conflicts of interest, demonstrating adherence to SEBI's internal mechanisms designed to manage such issues.
SEBI statement on the Hindenburg Research’s Report dated August 10, 2024 | The allegations made by Hindenburg Research, against the Adani Group, have been duly investigated by SEBI. Claims that such regulations, changes to regulations or circulars issued related to REITs were to… pic.twitter.com/zhugkv8iyt
— ANI (@ANI) August 11, 2024
SEBI also addressed the disclaimer in the Hindenburg Research report, reminding investors that the report itself acknowledges that Hindenburg may hold short positions in the securities discussed. This admission suggests that the report could be motivated by financial interests, which SEBI believes investors should consider before reacting. SEBI's statement strongly advised investors to exercise caution and not to make hasty decisions based on the report's claims.
In addition to defending its Chairperson, SEBI provided an update on its ongoing investigations into allegations related to the Adani Group, which were also mentioned in the Hindenburg report. SEBI informed that out of the 24 investigations it launched following these allegations, 23 have been completed, with the final investigation nearing completion. SEBI's extensive efforts in this matter were underscored by the issuance of over 100 summons, around 1,100 letters and emails to gather information, and over 100 requests for assistance from domestic and foreign regulators and external agencies. Furthermore, SEBI has meticulously examined more than 300 documents, encompassing approximately 12,000 pages of evidence, as part of its thorough investigation process.
SEBI also responded to specific allegations in the Hindenburg report concerning changes to the Real Estate Investment Trust (REIT) regulations. The report suggested that these changes were made to benefit Blackstone, a large multinational financial conglomerate, where Chairperson Buch's husband, Dhawal Buch, serves as an advisor. SEBI firmly rejected this claim, stating that its efforts to promote REITs and Small and Medium-sized REITs (SM REITs) were part of a broader strategy to diversify asset classes in the Indian market and were not intended to favor any particular entity.
In its conclusion, SEBI emphasized its commitment to transparency and integrity in its regulatory functions. The regulator reassured investors that it has the necessary safeguards in place to prevent conflicts of interest and that it remains focused on maintaining the stability and fairness of the Indian financial markets. The detailed statement aimed to address the concerns raised by the Hindenburg report and to reaffirm SEBI's role as a vigilant and responsible regulator.