Hindenburg Research’s New Allegations: A Deep Dive into SEBI Chairperson’s Conflict of Interest
Introduction: In a fresh wave of controversy, Hindenburg Research has once again set its sights on the Adani Group, but this time, the focus extends beyond the conglomerate. The latest allegations involve Mahad Bhi Puri Buz, the Chairperson of India’s stock market regulator, SEBI, and her husband, Dhawal Buz. These new claims raise questions about potential conflicts of interest and financial improprieties linked to their investments in offshore funds.
The Origin of the AllegationsThe Buz Family’s Alleged InvolvementThe Conflict of Interest DebateThe Broader Implications |
The Origin of the Allegations |
| The story begins in January 2023, when Hindenburg Research released a critical report against the Adani Group. The report alleged that the Adani Group had artificially inflated its stock prices through investments made via offshore entities, including funds based in Bermuda and Mauritius. Despite these serious claims, SEBI did not take significant public action, which led to surprise and criticism from various quarters, including Hindenburg.
Fast forward to June 27, 2024, SEBI issued a show-cause notice to Hindenburg, questioning the thoroughness and disclosure of its initial report. Hindenburg responded by asserting that SEBI had not identified any factual errors in its 106-page document. This response set the stage for the next chapter in this ongoing saga. |
The Buz Family’s Alleged Involvement |
| Hindenburg’s latest report alleges that Mahad Bhi Puri Buz and Dhawal Buz have been investing in the same offshore funds since 2015—funds that are purportedly linked to the Adani Group’s questionable financial activities. These funds, the Global Dynamic Opportunity Fund (GDOF) based in Bermuda and the IE Plus Fund in Mauritius, have been at the center of the controversy.
According to the report, both Mahad and Dhawal Buz opened an account in the IE Plus Fund on June 5, 2015, with investments facilitated through IIFL. The report details how, in April 2017, just before Mahad Bhi Puri Buz was appointed as a whole-time member of SEBI, an email was sent to the fund’s managers, instructing that the investment be solely under Dhawal Buz’s name. This move was allegedly intended to avoid any conflict of interest once Mahad assumed her regulatory role at SEBI. |
The Conflict of Interest Debate |
| The report goes on to claim that, even after Mahad Bhi Puri Buz joined SEBI, Dhawal Buz continued to hold investments in these funds, raising further questions about potential conflicts of interest. Moreover, in February 2018, Mahad Bhi Puri Buz allegedly sent an email from her personal account, directing the redemption of Dhawal’s investments in the GDOF. This raised suspicions about her involvement in financial activities that SEBI was supposed to regulate impartially.
Hindenburg also points to a potential conflict of interest involving Dhawal Buz’s appointment as a senior advisor to Blackstone, an American investment firm, in 2019. Despite lacking prior experience in capital markets, Dhawal was given this role, which Hindenburg suggests may have been influenced by his wife’s position at SEBI. |
The Broader Implications |
| The report does not stop at the Buz family’s investments. It also highlights Mahad Bhi Puri Buz’s connection to Agora Partners, a company registered in Singapore, where she held a 100% stake until March 2022—15 days after she was appointed SEBI Chairperson. This overlap has further fueled the debate about her ability to regulate the market without bias.
The most concerning allegation, however, is that SEBI’s inaction regarding the Adani Group’s alleged stock manipulation may have been influenced by the Buz family’s investments in the same funds. Hindenburg argues that SEBI’s lack of decisive action might be an attempt to prevent the exposure of these investments, thus protecting the chairperson’s interests. |
Conclusion: A Call for Transparency
As these allegations unfold, there is a growing demand for transparency and accountability from SEBI and its chairperson. The potential conflict of interest involving Mahad Bhi Puri Buz and her husband is a serious matter that requires a thorough investigation. Hindenburg’s report, while still an allegation, has highlighted the need for SEBI to address these claims with concrete evidence and a clear response.
The financial world awaits SEBI’s official stance on these allegations. Will the regulator take the necessary steps to ensure that its actions remain impartial and free from personal interests? Only time will tell.
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