Allegations against Adani duly investigated; Buch disclosed, recused time-to-time: Sebi

Mumbai: Allegations against the Adani Group have been "duly investigated", and Chairperson Madhabi Puri Buch disclosed and recused herself from time to time when dealing with matters, Sebi said on Sunday.

In its first comments following a new report by US-based short seller Hindenburg Research, the capital markets regulator said the investigation in only one of the 26 aspects it was probing is pending and the same is close to completion.

Buch has made "relevant disclosures" from time to time, and also recused herself in matters involving potential conflicts of interest, the Sebi said.

Hindenburg Research alleged that it suspects SEBI's unwillingness to act against the Adani group may be because Buch had stakes in offshore funds linked to the conglomerate.

The short seller alleged that Buch and her husband Dhaval had invested in one of the funds which was allegedly being used by Vinod Adani. It also flagged Dhaval's association with private equity major Blackstone, a promoter of multiple real estate investment trusts (REITs) and Sebi's continued pitch for the new investment avenue.

"'The allegations made by Hindenburg Research, against the Adani Group, have been duly investigated by Sebi," the capital markets regulator said in a statement.

The Supreme Court had itself noted in an order in January this year that 24 out of 26 investigations against Adani had been completed, it said, adding that one more was completed in March and the last is nearing completion now.

The regulator said it has issued over 100 summons, around 1,100 letters and emails to seek information as part of its investigation. Over 300 documents containing around 12,000 pages have been examined, it said..

A few weeks ago, Sebi issued a show cause notice to Hindenburg itself for potential violations. The SCN said gains of USD 22.25 million were made by Hindenburg and entities associated with it following the publishing of the report against Adani Group in January 2023.

The SCN said a fourth of the profits or USD 5.52 million were to be shared with Hindenburg, and USD 4.14 million had already been shared as of June 2023, while an amount of USD 1.38 million was yet to be done.

It had also asked it to explain why the unlawfully made profits should not be disgorged given the violations..

Hindenburg had shared the SCN on its website recently and also questioned the reasons why it was slapped with the SCN in the first place.

On Sunday, Sebi said as a matter of policy, it refrains from commenting on any investigation or ongoing enforcement matter, and added that the notice makes the reasons for its issuance clear.

"The proceedings in this matter (SCN) are ongoing and the same is being dealt with in accordance with the established procedure and in compliance with the principles of natural justice," Sebi said on Sunday.

On Buch's conduct, the statement said relevant disclosures required in terms of holdings of securities and their transfers have been made from time to time, and also added that she recused herself in matters involving potential conflicts of interest.

"'It emphasized that SEBI has adequate internal mechanisms for addressing issues relating to conflict of interest, which include disclosure framework and provision for recusal," it said.

On the issue of Dhaval's association with Blackstone, Sebi said the claim that promoting REITs among various other asset classes by SEBI was only for benefitting one large multinational financial conglomerate, is "inappropriate".

"...claims that such regulations, changes to regulations or circulars issued related to REITs were to favour one large multinational financial conglomerate, are inappropriate," it said, explaining a process which is followed before a regulation is drafted.

The regulator said it has built a robust regulatory framework which is aligned with the best global practices and also ensured investor protection, and affirmed the institution's commitment to ensure the integrity of the capital markets in the country.

It also asked investors to "remain calm and exercise due diligence" before reacting to reports like the one published by Hindenburg Research.