The Securities and Exchange Board of India (SEBI) is the apex regulator for the securities market with a preamble that affirms its commitment “to protect the interests of investors in securities and to promote the development of, and to regulate the securities market.”

In February 2022, the Government announced the appointment of Madhabi Puri Buch, who was at the time a Whole Time Member on the SEBI board, as the first woman to head the securities markets regulator.

An Indian Institute of Management, Ahmedabad alumna with a graduate degree in Mathematics from St. Stephen’s College, New Delhi, Ms. Buch is also one of the youngest chiefs at SEBI, taking the helm from her predecessor in March 2022, when she was about 56.

A veteran of the investment banking and financial services industry, who at one-time headed ICICI Securities as its MD &CEO, Ms. Buch was expected to bring vital industry perspective to her job of regulating the markets and securities issuances while ensuring that investor protection was always accorded the highest priority.

A protege of N. Vaghul and subsequently K.V. Kamath during her years at ICICI, Ms. Buch even had a stint as a consultant to the Shanghai-based BRICS-established New Development Bank, which Mr. Kamath led for a while.

First test

Less than a year into her job at SEBI’s helm, Ms. Buch faced her first stern test of regulatory stewardship when, in January 2023, U.S. short-seller Hindenburg Research levelled exhaustive charges of stock price manipulation and accounting fraud against the Adani Group of companies.

With the prices of all the listed Adani Group entities nosediving in the wake of the Hindenburg allegations, hundreds of crores of investor wealth was wiped out in just a matter of a few trading sessions, sparking a series of petitions in the country’s top court seeking judicial intervention.

In early March 2023, the Supreme Court ordered the formation of a committee to look into possible regulatory failure in dealing with the allegations that the Adani Group firms flouted norms in the securities market.

Clean chit

And in May, the court-appointed panel returned a finding that it could not conclude there had been regulatory failure.

It also cited the various investigations SEBI had been conducting since as far back as October 2020 into the ownership of 13 entities tied to allegations in the Hindenburg report about minimum public shareholding, adding that the markets watchdog’s probe into the entities’ final ownership had drawn a blank.

So, when on August 10 this year Hindenburg fired a fresh salvo, this time levelling charges against Ms. Buch of conflicts of interest including having invested in a Mauritius-based offshore fund with links to the Adanis, all hell broke loose.

The SEBI Chairperson and her husband Dhaval Buch, a supply chain specialist who had served as FMCG major Unilever’s global chief procurement officer before retiring, issued two back-to-back statements in response to the short seller’s allegations seeking to clear the air.

In the first statement, the Buch couple asserted: “In the context of allegations made… against us, we would like to state that we strongly deny the baseless allegations and insinuations. The same are devoid of any truth. Our life and finances are an open book. All disclosures as required have already been furnished to SEBI over the years. We have no hesitation in disclosing any and all financial documents, including those that relate to the period when we were strictly private citizens, to any and every authority that may seek them.”

The markets watchdog, for its part, also issued an exhaustive statement on August 11 in which it emphasised that “relevant disclosures required in terms of holdings of securities and their transfers have been made by the Chairperson from time to time. Chairperson has also recused herself in matters involving potential conflicts of interest”.

People with knowledge of SEBI’s inner workings stressed that Ms. Buch had at no point in time sought to influence any of the multiple investigations being carried out by the markets watchdog.

“She can be very aggressive in her approach to getting work done and demanding results,” said a former member of one of the several committees SEBI uses in its consultative process to craft and fine tune policies and the overall regulatory environment.

“And yes, that level of abrasiveness is a clear failing. However, most of her former ICICI group colleagues appreciate and vouch for her personal integrity,” the person added, speaking on the condition of anonymity.

Ms. Buch is also facing a groundswell of internal restiveness in SEBI, with a grouping of officers questioning the “mistrust and lack of respect shown at the highest level towards employees”.

“She is facing a real media trial with the Opposition also deciding to target her to get at the government,” says a former banker. “Also, there are several regulatory measures that SEBI has taken and is planning that a group of market players are strongly opposed to. They too will be happy to see her fall,” the banker added.

Tightening norms

Among the measures tightening norms is a SEBI guideline that took effect on September 9 requiring all Foreign Portfolio Investors (FPIs) with more than 50% global exposure to India or holding ₹25,000 crore investment in Indian equities to disclose all granular details on the ultimate beneficiary of the fund to the regulator. Failing which, the FPI would have to liquidate and rebalance its holdings to comply with the threshold specified by SEBI. And another proposal aims to tighten guidelines for derivatives trading.

“For the sake of the institution and investor faith in the markets regulator, it will, however, be best if an independent review is conducted at the earliest to clear the air on everything related to the SEBI chief,” said another former SEBI official. “This is something that will surely be in her interest too, especially given the statement asserting that her life is an “open book”,” the person added.

File picture of Madhabi Puri Buch, Chairperson of Securities and Exchange Board of India (SEBI)
| Photo Credit: Reuters

The chief of India’s markets regulator, Madhabi Puri Buch, who is under attack from Hindenburg Research following its accusations against the Adani Group, is renowned as a no-nonsense leader who is used to difficult situations.

The first woman at the helm of the Securities and Exchange Board of India, Ms. Buch has a tough, businesslike approach to her work, people who know her say.

On Saturday, Hindenburg alleged she had a conflict of interest in the Adani matter because of a previous investment in an offshore fund used by the Adani Group.

Ms. Buch countered saying the investments pre-date her term at SEBI and that all necessary disclosures were made.

She termed Hindenburg’s allegations as an attempt at “character assassination” following the regulator’s enforcement action and “show cause” notice to the U.S. based shortseller for violating Indian rules. A show cause notice signals an intention to take disciplinary action if satisfactory explanations are not provided.

If Ms. Buch made the requisite disclosures and met the compliance requirements, nothing more should be expected of her, said Hetal Dalal, chief operating officer at Institutional Investor Advisory Services, a proxy advisory firm in India.

“Nevertheless, the allegations made by Hindenburg have made her and SEBI vulnerable,” Ms. Dalal said. “A regulator must ring fence itself from the public onslaught.”

Demanding leader

Ms. Buch was appointed to the top post at SEBI in March 2022 after spending five years as a whole-time member, the second highest position at the regulator. She completes her three-year term in March next year.

A career banker, Ms. Buch spent her early working years at India’s second largest private lender, ICICI Bank, later heading its broking arm ICICI Securities. She also dabbled in private equity as part of the Singapore office of Greater Pacific Capital.

She is known by SEBI insiders as a demanding leader whose decisions are led by data. Ms. Buch is a frequent speaker at industry forums, armed with data-packed presentations.

She has faced pushback on a number of issues partly due to her style of operating but also because she has attempted to shake the status quo, according to industry insiders.

She has enforced stricter disclosures on corporations for related party transactions and on foreign investors for concentrated holdings in India stocks, public documents show.

She planned to lower fees for India’s $770.77 billion mutual fund industry, but the proposal was put on hold because of opposition by asset management firms, Reuters reported.

Ms. Buch was also forced to stagger the implementation of optional same day settlement for India’s stocks after opposition from foreign investors.

Most recently, she has proposed tighter rules to cool the frenzy in India’s options markets.

“Ever since Ms. Buch has taken charge as chairperson, the pace of regulatory changes has increased,” said Shriram Subramanian, founder of Ingovern Research Services, a proxy advisory firm in India.

Mr. Subramanian, however, said the changes had been done in a “consultative manner”.

Ms. Buch has faced opposition within SEBI too in her attempts to professionalise the organisation, including by raising performance targets, said five SEBI officials declining to be named as they were not authorised to speak to the media.

A few junior employees staged a ‘silent protest’ earlier this month against some of these HR policies. “There is a general sense of mistrust and discontent,” said one of the five officials.

An email sent to the SEBI spokesperson was not answered immediately. Messages and calls to Ms. Buch since Saturday were not answered. A message to her official email address went unanswered too.

Hindenburg’s allegations may prove to be Ms. Buch’s toughest challenge yet with the matter taking a political turn and opposition political parties calling for a parliamentary probe and asking her to resign.

“The integrity of SEBI, entrusted with safeguarding the wealth of small retail investors, has been gravely compromised by the allegations against its chairperson,” Indian opposition leader Rahul Gandhi said on social media platform X.

The government has been silent on the matter so far.

Ravi Shankar Prasad, spokesperson of the ruling Bharatiya Janata Party, said: “Instead of giving a response to the SEBI show cause notice, Hindenburg has issued this report, which is a baseless attack. SEBI and the family (of Buch) have responded, we don’t have anything to add to that.”