Hindenburg claims head of India’s market regulator had stake in offshore funds used by Adani Group

MUMBAI (Reuters) – U.S.-based short seller Hindenburg Research claimed in a new report released on Saturday that Indian market regulator chairman Madhabi Puri Buch previously had investments in certain offshore funds also used by the Adani group.

Buch did not immediately respond to a call and a message on WhatsApp. The market regulator also did not immediately respond to an email seeking comment.

Citing whistleblower documents, Hindenburg said Buch and her husband had interests in an offshore fund in which a significant amount was invested by associates of Vinod Adani, brother of Gautam Adani, who is chairman of the Adani group of companies.

In January 2023, Hindenburg released a report alleging improper use of tax havens and stock manipulation by the Adani group, leading to a $150 billion sell-off of the conglomerate’s shares, despite denying misconduct. 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 still ongoing. In May, six Adani Group companies announced that they had received notices from SEBI for alleged violations of India’s stock market rules.

In addition to the investigation into the Adani group, SEBI sent a “show cause” notice to Hindenburg Research, alleging that the short-seller had violated the country’s rules by setting up a short bet using non-public information.

Hindenburg Research said these allegations were “nonsense” in a note published on its website in July, which also made public the regulator’s announcement.

In her latest report, Hindenburg attempts to establish a link between offshore funds that traded in Adani Group shares and personal investments of Buch and her husband.

It said the Bermuda-based Global Opportunities Fund, which a Financial Times investigation found was used by entities linked to the Adani group to trade in shares of group companies, had sub-funds.

Buch and her husband were investors in one of these sub-funds in 2015, Hindenburg alleged, citing whistleblower documents.

In 2017, before Buch was appointed as a full-time member and second-highest office at the Securities and Exchange Board of India (SEBI), her husband requested to become the sole manager of the account, Hindenburg said, citing whistleblower documents.

Later in 2022, she was appointed as head of the regulatory body.

“We think our findings raise questions that deserve further research. We welcome additional transparency,” said Hindenburg.

(Reporting by Jayshree.P. Upadhyay and Ira Dugal in Mumbai; Editing by Alex Richardson and Christina Fincher)