Hindenburg tries to sink Sebi's Madhabi Puri Buch

Top of the Morning

Good morning listeners,

Welcome to Top of the Morning by Mint, your weekday newscast that brings you five major stories from the world of business. It's Monday, August 12, 2024. My name is Nelson John.

Our first four stories of today have to do with the Hindenburg allegations against the markets regulator Sebi. Strap in.

When Hindenburg Research issued a note on the Adani Group in January last year, it had set off a firestorm in India’s capital markets. At one point, the Adani Group lost more than 100 billion dollars worth of market cap. On Saturday night, Hindenburg turned its attention to India yet again — but this time, towards the markets regulator. Hindenburg has put Madhabi Puri Buch, the head of the Securities and Exchange Board of India, under the lens. This is the first time Hindenburg has targeted an individual — the head of the regulator, no less. Varun Sood breaks down the new report, and gets some reactions from the markets industry.

Specifically, Hindenburg accused Buch of conflict of interest as she owns a consulting firm based in Mumbai. The research group said that Sebi's clean chit to the Adani Group became tainted because of this issue. Buch and her husband, who works at private equity firm Blackstone, have strongly denied these allegations. However, some governance experts told Varun and Shayan Ghosh that Hindenburg has some legitimacy to its argument. It's a tough gig to be the chief of the markets regulator, and this muck slinging certainly doesn't bode well for Buch.

Buch and her husband have termed this report as a "character assisination" by the US-based short seller and research group. They maintain that there was no conflict of interest; all stakes were either disclosed or transferred prior to Buch assuming her position at Sebi. However, the Buchs also have an offshore fund in Mauritius, which also held Adani Group shares. Ram Sahgal and Neha Joshi help you untangle this complicated situation, to help you understand the facts and decide for yourself on whose side you'd like to believe.

Another thread that the Hindenburg report pulled on was Reits, or real estate investment trusts. Hindenburg pointed out that since Bunch took over at Sebi, she has introduced a lot of legislation that has to do with governing Reits. Hindenburg alleges that this helped her husband, who as we mentioned already works at Blackstone. Blackstone was involved in launching India's first and second Reits, as well as the first listed Reit. Madhurima Nandy explains the complexities of this allegation — the first of which would be to help you understand how Reits have actually fared in India since they were launched in 2019.

Moving on, you must have been annoyed by misleading advertisements. They can claim one thing and offer another, or exaggerate certain facets. The Supreme Court has taken note of this matter too, and pulled up the central government last week to have better regulations in place to prevent this. Dhirendra Kumar reports that the government is planning on rolling out a unified system to address such complaints by consumers. Presently, the process to file a complaint against a misleading ad is complex and full of delays. Companies such as Patanjali have been at the receiving end of such complaints, triggering concerns about violation of consumer rights.

That’s all for today. Thank you for listening.

We're eagerly looking forward to our next Top of the Morning episode, which will be packed with fresh business news. Until then, have a great day!

Show notes:

Emboldened Hindenburg’s profit score has gotten better as it targets bigger guns

Sebi chair Madhabi Buch owns majority in consultancy named in Hindenburg report

Sebi chief responds to Hindenburg allegations, asserts compliance with all rules

Mint Explainer: Why real estate investment trusts are in Hindenburg’s crossfire

Pulled up by Supreme Court, Centre plans complete overhaul of consumer complaints redressal mechanism