SEBI stated that "Madhabi Puri Buch has withdrawn from matters related to conflicts of interest".
SEBI, the market regulator, confirmed in a statement that it has thoroughly investigated the allegations brought forth by Hindenburg Research against the Adani Group.
Chairperson Madhabi Buch consistently provided necessary disclosures and stepped back from discussions where there could be potential conflicts of interest, according to a statement from the regulator. The regulator also confirmed that it has thoroughly examined the claims made by Hindenburg regarding Adani, noting that the final investigation out of 26 is approaching its conclusion.
Investors are encouraged to stay composed and conduct thorough research before responding to these reports. It’s also important for them to pay attention to the disclaimer included, which indicates that Hindenburg Research might hold short positions in the securities discussed in the report, as noted in SEBI’s statement.
SEBI has responded to the report from Hindenburg Research, stating, “The report claims, among other things, that SEBI has failed to take action against the Adani Group. It also questions our decision to issue a show cause notice to Hindenburg Research on June 27, 2024. Additionally, it alleges that SEBI altered the SEBI (REIT) Regulations 2014 to favor a diversified multinational financial conglomerate.” “These matters require a suitable response. Importantly, the allegations made by Hindenburg Research regarding the Adani Group have been thoroughly investigated by SEBI.”
In its ruling on January 3, 2024, the Supreme Court highlighted that SEBI had successfully wrapped up twenty-two of the twenty-four investigations concerning the Adani group. Following this, an additional investigation was finalized in March 2024, with the last one nearing its conclusion. Throughout this ongoing inquiry, over 100 summons have been dispatched, along with approximately 1,100 letters and emails to gather necessary information. Moreover, more than 100 requests for assistance have been made to both domestic and international regulators, as well as external agencies. In total, over 300 documents, comprising around 12,000 pages, have been thoroughly reviewed.
The report aims to scrutinize SEBI’s decision to issue a show cause notice to Hindenburg Research on June 27, 2024. This notice, which claims that Hindenburg Research has breached securities laws, was issued after following the proper legal protocols. Notably, Hindenburg Research has published the show cause notice on its website, detailing the reasons behind its issuance. The proceedings related to this issue are still in progress and are being handled according to established procedures and the principles of natural justice.
The report highlights that the adoption of the SEBI (REIT) Regulations 2014, along with subsequent amendments, has greatly benefited a major multinational financial conglomerate. It’s important to mention that these regulations have undergone various updates over the years.
Whenever a new regulation is introduced or an existing one is amended, a thorough consultation process is established to gather insights and feedback from various stakeholders, including industry players, investors, intermediaries, relevant Advisory Committees, and the general public. It is only after this extensive consultation that a proposal for a new regulation or modification of an existing one is presented to the SEBI Board for their consideration and discussion. Regulations receive official notification only after the SEBI Board’s approval. To ensure transparency, the agenda and outcomes of Board meetings are made available on the SEBI website. Therefore, assertions that these regulations or related circulars concerning REITs are designed to benefit a single large multinational financial entity are unfounded.
SEBI has consistently emphasized the importance of various asset classes, including REITs, SM REITs, InvITs, and Municipal Bonds, in fostering the growth of the Indian securities market. These instruments play a crucial role in democratizing markets, channeling household savings into financial avenues, and facilitating capital formation through capital markets. The latest SEBI Annual Report, particularly in the Chairperson’s Statement under sections like ‘Financial Inclusion and Democratization of Markets’ and ‘New Avenues for Capital Formation,’ reinforces this perspective. Thus, the assertion that SEBI’s promotion of REITs and SM REITs serves solely to benefit a single large multinational financial entity is unfounded.
