The controversy swirling around the Securities and Exchange Board of India chairperson Madhabi Puri Buch refuses to die down. Over the last month, US-based Hindenburg Research has accused Madhabi Buch and her husband of using their holding stakes in layered offshore funds to invest in and boost the shares of Adani Group companies. There was also an allegation from a Congress spokesperson that she continued to draw a salary from ICICI Bank during her tenure at Sebi. As if this was not enough, Zee chairperson Subhash Chandra levelled charges of corruption against her; meanwhile, Sebi is investigating Zee for diversion of funds.
In response, the Puri Buch couple have said there is no conflict of interest and the investment in the fund referred to by Hindenburg was made in 2015, when they were private citizens living in Singapore. After Madhabi Buch became a whole-time director at Sebi, and after the fund manager friend who had managed their funds quit in 2018, they redeemed their investments. ICICI Bank has denied the Congress’s allegations and said Madhabi Buch had received no remuneration after her retirement in 2013. However, there are other questions that need answers. For one, a Sebi board member has claimed Madhabi Buch did not recuse herself from the Adani investigation, though a release from the market regulator said she had “recused herself in matters involving potential conflicts of interest”.
Again, Sebi issued a notice to Hindenburg in July for betting on the stocks it was attacking, but the notice was kept under wraps. It was Hindenburg that publicised Sebi’s action. These and other loose ends have undermined the credibility of the regulator. Sebi is an autonomous, statutory body set up in 1992 to serve as a watchdog over the country’s securities and commodities markets. The stakes are high— investors small and big trade shares worth thousands of crores of rupees every day. So it is imperative the market regulator acts as an independent referee with the courage to enforce rules. While governments come and go, autonomous bodies such as the Reserve Bank and Supreme Court must provide institutional continuity through their leadership. Sebi is one such body that has to work with bipartisan support. To restore public confidence, the furore around the Sebi chief needs to be closed as soon as possible.