Hindenburg alleges India market regulator chief held stake in offshore funds used by Adani Group

US-based short-seller Hindenburg Research, in a new report released on Saturday, alleged that the chairperson of India's market regulator, Madhabi Puri Buch, previously held investments in certain offshore funds that were also used by Adani Group.

In a late-night press statement, Buch denied these allegations and called them baseless, adding that a detailed statement would be issued later.

Hindenburg's report sparked fresh criticism from India's opposition political parties, who demanded a parliamentary probe.

Citing whistleblower documents, Hindenburg said Buch and her husband held stakes in an offshore fund where a substantial amount of money was invested by associates of Vinod Adani, brother of Gautam Adani, who is chairman of Adani Group.

Adani Group has previously denied these allegations, and an email query sent to Adani Group was not immediately answered.

In January 2023, Hindenburg released a report alleging improper use of tax havens and stock manipulation by Adani Group, setting off a $150 billion sell-off in the conglomerate's stocks despite its denials of wrongdoing. The stocks have since partially recovered.

The 2023 report also led to an enquiry by the country's market regulator, the Securities and Exchange Board of India (SEBI), which is still underway. In May, six Adani Group companies disclosed they had received notices from SEBI alleging violation of Indian stock market rules.

Alongside the enquiry into Adani Group, SEBI sent a "show cause" notice to Hindenburg Research alleging that the short-seller violated the country's rules by setting up a short-bet using non-public information.

Hindenburg Research said these allegations were "nonsense" in a note published on its website in July, which also made public the regulator's notice.

In its latest report, Hindenburg attempts to draw a link between offshore funds that traded in Adani Group shares and personal investments of Buch and her husband. It says that Bermuda-based Global Opportunities Fund, which according to a Financial Times investigation was used by entities connected to Adani Group to trade in the shares of group companies, had sub-funds.

Buch and her husband were investors in one of these sub-funds in 2015, Hindenburg alleged, citing whistleblower documents.

In 2017, before Buch was appointed as a whole-time member, the second-highest ranking office at Securities and Exchange Board of India (SEBI), her husband requested to be the sole operator of the account, Hindenburg said, citing whistleblower documents.

In 2018, Buch wrote an email seeking to redeem her husband's entire investment in the fund, the whistleblower documents showed. Later in 2022, she was appointed as head of the regulatory body.

"We think our findings raise questions that merit further investigation. We welcome additional transparency," Hindenburg said.

In the joint statement issued by Buch and her husband, they said their finances are an open book and that they have no hesitation in disclosing any and all financial documents to any authority.

"All disclosures as required have already been furnished to SEBI over the years," the statement said.

The 10-company conglomerate, which operates across sectors including airports, ports, electricity, and gas among others, is seen to have benefitted from the Narendra Modi-led government's push to develop the country's infrastructure.

India's main opposition Congress party has previously alleged close ties between the Adani group and the ruling Bharatiya Janata Party (BJP), which both sides have denied.

A spokesperson for the Congress party, in a statement posted on social media platform X late on Saturday, called on the government to "eliminate all conflicts of interest in the SEBI investigation of Adani". The party also demanded a parliamentary probe to "investigate the full scope" of the Adani matter.