The Securities and Exchange Board of India (Sebi) and its chairperson, Madhabi Puri Buch, on Sunday rebutted fresh allegations made by New York-headquartered Hindenburg Research in the Adani matter.

In a new report on Saturday, Hindenburg questioned the delay in the Adani probe and Sebi’s objectivity in the matter, alleging Buch and her husband, Dhaval, were conflicted parties because they had invested in a fund that was allegedly used to inflate stock prices of the Adani group.

Besides raising eyebrows over the use of a foreign fund structure, the US short-seller also accused the Indian securities regulator of promoting real estate investment trusts (REIT) due to Dhaval Buch’s association with private equity major Blackstone, a large investor in the domestic realty space.

Both Sebi and the Buchs issued separate statements rebutting all the allegations, terming them baseless and an attempt at character assassination.

The Buchs found support from legal experts and market participants such as Amfi, the mutual fund industry body, which backed her credibility and questioned the US short-seller’s intent. However, the Sebi chairperson faced criticism from certain political parties, which called for a joint parliamentary committee to probe the allegations.

Citing whistleblower documents, Hindenburg had on Saturday issued a report on the couple’s investments in IPE Plus 1 Fund, a Mauritius-based segregated fund under the Global Dynamic Opportunities Fund (GDOF) managed by IIFL Wealth (now 360-One)

The Buchs and 360-One clarified the fund, accused of having links to the Adani group, had never invested in any Adani securities throughout its tenure. Further, the holdings of the Buchs were only 1.5 per cent of the fund’s corpus and they never had any say in the investment decisions.

The couple stated their investment, which dates back to a time when they were residing in Singapore, was because Chief Investment Officer Anil Ahuja was Dhaval’s childhood friend. They soon redeemed after Ahuja quit in 2018.

Responding to the allegations that Sebi was favouring REITs, the couple stated that Dhaval had no association with the real-estate side of Blackstone and was associated with private equity PE and other companies, given his expertise in supply-chain management.

Buch said Blackstone was on her “recusal list” and all disclosures and recusal had been diligently followed at Sebi.

The market watchdog in its statement said the regulatory decisions around REITs were not favourable to only one player and the decisions were taken after public consultation with board approval.

On the allegations that Sebi had not taken any action against the Adani group due to conflict of interest, the regulator stated that 23 out of 24 investigations in the Adani-Hindenburg matter were completed and one is close to completion. Sebi said enforcement proceedings were cumbersome, involving issuing show-cause notices, providing personal hearing, which then culminates in an order.

On June 26, Sebi had slapped show-cause notices (SCNs) on Hindenburg Research, its founder Nathan Anderson, hedge fund Kingdon Capital, and three others. In the notice, the regulator had alleged Hindenburg had made misleading disclosures as a scheme to make a profit of Rs 183 crore from short-selling to client Kingdon Capital, with which it had shared its report before making it public. Hindenburg and Kingdon had entered into a 25 per cent profit-sharing pact.

The domestic securities regulator had given 21 days to submit responses. “Hindenburg has been served a show cause notice for a variety of violations in India. It is unfortunate that instead of replying to the notice, they have chosen to attack the credibility of the Sebi and attempt character assassination of the chairperson,” the regulator said.

Sebi’s probe into the Adani-Hindenburg matter was initiated after the latter published a report on the group, alleging “fraud”, in January 2023.

The report had wiped out Rs 12 trillion of the Adani group firms’ market cap from Rs 19.2 trillion to below Rs 7 trillion. The group has now recouped all the losses and trades above the levels seen before the publication of the initial Hindenburg report in January 2023.

In a fresh statement, the Adani group called Hindenburg’s latest allegations mischievous and manipulative.

“We completely reject these allegations against the Adani Group which are a recycling of discredited claims that have been thoroughly investigated, proven to be baseless and already dismissed by the Supreme Court in January 2024,” the group said in an exchange filing.

First Published: Aug 11 2024 | 9:04 PM IST