Newsmaker: Who is Madhabi Puri Buch, India's markets regulator under attack from Hindenburg?

ICICI Securities

12/08/2024 09:07

By Jayshree  P Upadhyay
       MUMBAI, Aug 12 (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, 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.
    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 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," Dalal said. "A regulator must ring
fence itself from the public onslaught."
    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, 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. 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.
    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. 
    Subramanian, however, said the changes had been done in a
"consultative manner".
        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 Buch since Saturday were not
answered. A message to her official email address went
unanswered too.
    Hindenburg's allegations may prove to be 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"
 ($1 = 83.9550 Indian rupees)

 (Reporting by Jayshree P. Upadhyay, writing by Ira Dugal,
Editing by Raju Gopalakrishnan)
 ((Ira.Dugal@thomsonreuters.com; +91-9833024892;))