Explainer: The Latest Controversy Involving SEBI, Adani Group, and Market Impact

Explainer: The Latest Controversy Involving SEBI-  India's stock market has been buzzing with activity and social media discussions lately, primarily due to issues surrounding its regulatory body, the Securities and Exchange Board of India (SEBI). Let's break down what’s been happening.

The Initial Spark

Over the weekend, US-based activist-investor Hindenburg Research hinted at "something big" coming and soon after, released a report on social media platform X (formerly Twitter). This report accused Madhabi Puri Buch, the chairperson of SEBI, of having connections with offshore funds used by the Adani group, a controversial Indian conglomerate. Both Buch and the Adani group have denied any wrongdoing.

Background on Adani Controversy

Hindenburg Research had previously accused the Adani group, led by Indian billionaire Gautam Adani, of stock manipulation and accounting fraud. The Adani group, which includes companies in various sectors like commodities, airports, utilities, ports, and renewable energy, strongly denied these allegations. Despite the denials, the controversy led to a significant drop in the group’s market value, though it has since mostly recovered. SEBI is still investigating these claims.

New Allegations

Hindenburg’s latest report suggests that Ms. Buch’s connections to offshore funds linked to the Adani group might be affecting SEBI's investigation. They claimed that Buch and her husband invested in these funds in 2015, before she joined SEBI in 2017. They also pointed out that Ms. Buch used her personal email to handle the investment and questioned whether her husband’s role as an adviser at Blackstone, a US investment firm, might have influenced SEBI’s regulatory actions.

Ms. Buch’s Response

Ms. Buch and her husband have responded by stating that their investments were made when they were private citizens, well before Ms. Buch joined SEBI. They emphasized that their investment was unrelated to Adani group stocks and followed all disclosure norms. They criticized Hindenburg’s report as an attack on SEBI’s credibility and a personal attack on Ms. Buch.

SEBI’s Stance

SEBI stated that it has thoroughly investigated the allegations against the Adani group and that Ms. Buch has made all necessary disclosures and recused herself from potential conflicts of interest.

Adani Group’s Position

The Adani group has dismissed the latest allegations as baseless and reiterated that their overseas holding structure is transparent. They also noted that Anil Ahuja, mentioned in the Hindenburg report, was a director at their company years ago and that they have no current commercial ties with him.

Political Reactions

Opposition leader Rahul Gandhi has criticized the situation, claiming it undermines SEBI’s integrity and calling for a parliamentary inquiry. The Congress party has demanded that the government address potential conflicts of interest in SEBI’s investigation. In response, the ruling Bharatiya Janata Party (BJP) has accused Congress of creating economic instability and hostility against India.

Also read: Adani Group Shares Drop Amid New Allegations: What You Need to Know

Looking Ahead

Hindenburg Research has reaffirmed its accusations, raising new questions about the ongoing investigation. SEBI, Ms. Buch, and the Adani Group have yet to respond to these new comments. Opposition leaders are expected to continue highlighting the issue, suggesting that this controversy is far from over.