Hindenburg vs SEBI: Plea in Supreme Court asks to direct completion of probe against Adani group

Securities and Exchange Board of India (SEBI) chairperson Madhabi Puri Buch. File
| Photo Credit: PTI

An application filed in the Supreme Court on Tuesday (August 13, 2024) said the new Hindenburg Research’s allegations against Securities Exchange Board of India (SEBI) chairperson Madhabi Buch creates an “atmosphere of doubt”, making it incumbent for the court to conclude its investigation against the Adani Group and declare its findings.

The plea filed by petitioner-in-person, advocate Vishal Tiwari, reminded that the Supreme Court, in its judgment on January 3, had given SEBI three months “preferably” to complete 24 investigations into Hindenburg’s earlier report accusing the Adani Group of share price manipulations and violations of securities law.

In that time, the SEBI had completed 22 of the 24 investigations. It was waiting for inputs from external agencies regarding the remaining two probes.

The application said it would be prudent, in the wake of current developments, to fix a specified time period for the completion of the pending investigations.

“It is important in public interest and for the interest of the Investors who lost their funds after the publication of the Hindenburg report in 2023 against Adani group. The right to know about the investigations led by SEBI and its conclusions are essential for the benefit of investors,” the application argued.

Mr. Tiwari referred to Hindenburg’s allegations that Ms. Buch and her husband have stakes in offshore funds linked to the Adani Group’s alleged money siphoning scandal.

The report had cited “whistleblower documents”.

The report comes a year and a half after Hindenburg’s damaging report on the Adani Group that had far-reaching consequences, including the cancellation of the company’s flagship ₹20,000 crore follow-on public offer.

In a blog post, Hindenburg claimed that 18 months after its initial report on Adani, the Securities and Exchange Board of India (SEBI) has shown a “surprising lack of interest in investigating Adani’s alleged web of undisclosed Mauritius and offshore shell entities,” the application alleged.

Mr. Tiwari cited whistleblower documents relied on by Hindenburg to allege that the SEBI chairperson and her husband were involved in the same offshore Bermuda and Mauritius funds allegedly controlled by Vinod Adani, the elder brother of Adani Group chairman Gautam Adani. These funds were believed to have been used for round-tripping funds and inflating stock prices, he said.

According to Hindenburg, Mr. Tiwari said, a declaration of funds signed by a principal at IIFL stated that the source of the investment was “salary”, and the couple’s net worth was estimated at $10 million. Hindenburg had further alleged that on March 22, 2017, just weeks before appointment of SEBI chairperson, her husband wrote to Mauritius fund administrator Trident Trust, requesting to be the sole person authorised to operate the accounts.

The email, allegedly obtained from a whistleblower, appeared to indicate an attempt to move the assets out of his wife’s name ahead of her politically sensitive appointment.

A later account statement in February 2018, addressed to Ms. Buch’s private email, reportedly revealed the full details of the structure, including GDOF Cell 90 (IPEplus Fund 1) — the same Mauritius-registered cell allegedly used by Mr. Vinod Adani.

“The SEBI chief has denied these allegations as baseless. This court has also held that third party reports cannot be considered. But all this has created an atmosphere of doubt in the minds of the public and investors and in such circumstances…” the application said.