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MUMBAI (Reuters) – India’s market regulator chief Madhabhi Puri Buch previously held investments in certain offshore funds that were also used by Adani Group, U.S. short-seller Hindenburg Research alleged in a new report on Saturday.
In a late-night press statement, Buch denied the allegations as baseless, adding that a detailed statement would be issued later.
Citing whistleblower documents, Hindenburg said Buch and her husband owned stakes in an offshore fund where a large sum of money was invested by associates of Vinod Adani, brother of Gautam Adani, chairman of the Adani Group.
The Adani Group had earlier denied the allegations, and an emailed query to the Adani Group was not immediately responded to.
In January 2023, Hindenburg released a report alleging improper use of tax havens and share manipulation by the Adani Group, sparking a $150 billion selloff in the group’s shares despite it denying any wrongdoing. The shares have since partially recovered.
The 2023 report also led to an investigation by the country’s market regulator, the Securities and Exchange Board of India (SEBI), which is ongoing. In May, six Adani Group companies revealed they had received notices from the SEC alleging violations of Indian stock market rules.
Along with the investigation into Adani Group, the Securities and Exchange Board of India has sent a “show cause” notice to Hindenburg Research alleging that the short seller violated the country’s rules by setting up a short bet using non-public information.
“These claims are nonsense,” Hindenburg Research said in a note posted on its website in July, which also published the regulator’s notice.
In his latest report, Hindenburg attempts to find a link between the offshore funds that traded in Adani Group shares and the personal investments of Bush and her husband.
The Bermuda-based Global Opportunities Fund, which was used by entities linked to the Adani Group to trade in shares of the group’s companies, according to a Financial Times investigation, reportedly had sub-funds.
Hindenburg alleged that Buch and her husband were investors in one of these sub-funds in 2015, citing whistleblower documents.
In 2017, before Buch was appointed as a permanent member, the second-highest position on the Securities and Exchange Board of India (SEBI), her husband asked to be the sole operator of the account, Hindenburg said, citing whistleblower documents.
Later in 2022, she was appointed as the Chairperson of the Regulatory Authority.
“We believe our findings raise questions that deserve further investigation. We welcome more transparency,” Hindenburg said.
In the joint statement issued by Butch and her husband, they said that their financial affairs are an open book and that they do not hesitate to disclose any financial documents to any authority.
“All the required disclosures have already been made to the Securities and Exchange Board of India over the years,” the statement said.
