Continuing its broadside against Sebi chairperson Madhabi Puri Buch, US short-seller Hindenburg Research has asked her to come clean on the clients of a consulting firm in which she held stake even while being in office.

Hours after Madhabi and her husband, Dhaval issued a statement calling Hindenburg's latest tirade as an attack on the credibility of Sebi and attempted "character assassination", Hindenburg in a series of posts on X said their response includes several important admissions and raised numerous new critical questions.

"Buch's response now publicly confirms her investment in an obscure Bermuda/Mauritius fund structure, alongside money allegedly siphoned by Vinod Adani. She also confirmed the fund was run by a childhood friend of her husband, who at the time was an Adani director," it said.

Hindenburg had on Saturday alleged that the Buchs opened an account in 2015 with a wealth management firm in Singapore to invest undisclosed sum of money in a Mauritius-registered offshoot of a Bermuda-based fund. The Mauritian fund was run by an Adani director and its ultimate parent was the vehicle used by two Adani associates to round-trip funds and inflate stock prices.

Hindenburg also alleged that she held 100 per cent interest in a Singaporean consulting firm, Agora Partners from April 2017 to March 2022 while she was a whole-time member in Sebi. She passed on the shares to her husband two weeks after her appointment as the Sebi chairperson.

It is being asked if Agora had publicly traded Indian firms as clients.

In response, the Buchs on Sunday said the investments were made in 2015, well before her appointment as a whole-time member of Sebi in 2017 and the subsequent elevation as chairperson in March 2022, and in capacity as "private citizens living in Singapore". These funds became "dormant" on her appointment in Sebi.

"Sebi was tasked with investigating investment funds relating to the Adani matter, which would include funds Ms Buch WAS PERSONALLY INVESTED IN and funds by the same sponsor which were specifically highlighted in our original report. This is obviously a massive conflict of interest," Hindenburg said.

While the Opposition parties led by Congress have used the Hindenburg allegations to demand a probe by a joint parliamentary committee, the BJP claimed that anti-Modi billionaire investor George Soros was invested in Hindenburg and its report was aimed at weakening the Indian economy and destroying investment in the country.

Some saw Hindenburg attack on Buch as an immediate fallout of the June 27 show-cause notice Sebi sent to the US firm, founder Nathan Anderson, as well as New York-based hedge fund manager Mark Kingdon and his Kingdon Capital Management, for allegedly violating Indian laws while profiting from the fall in Adani shares last year.

"Buch's statement also claims that the two consulting companies she set up, including the Indian entity and the opaque Singaporean entity "became immediately dormant on her appointment with Sebi" in 2017, with her husband taking over starting in 2019. Per its latest shareholding list as of March 31, 2024, Agora Advisory Limited (India), is still 99 per cent owned by Madhabi Buch, not her husband. This entity is currently active and generating consulting revenue," Hindenburg said.

Also, she remained a 100 per cent shareholder of Agora Partners Singapore until March 16, 2022, per Singaporean records, owning it during her entire time as a Sebi whole-time member. "She only transferred her shares into her husband's name two weeks after her appointment as SEBI chairperson," it alleged.

The Buchs have strongly denied the "baseless allegations and insinuations made in the report", saying the charges were "devoid of any truth".

Sebi too defended its chairperson. In a two-page statement, it said Buch had made relevant disclosures from time to time and she "had also recused herself in matters involving potential conflicts of interest." Adani Group too denied any commercial dealings with the Sebi head, while wealth management entity 360ONE - formerly called as IIFL Wealth Management - separately said Buchs' investment in IPE-Plus Fund 1 was less than 1.5 per cent of the total inflows and that it did not make any investments in Adani shares.

Hindenburg said the Singaporean consulting entity she set up doesn't publicly report its financials like revenue or profit and "so it's impossible to see how much money this entity has earned during her time at Sebi." "The Indian entity, still 99 per cent owned by the SEBI chairperson, has generated INR 23.985 million (U ~$312,000) in revenue (i.e. consulting) during the financial years ('22, '23, and '24), while she was serving as Chairperson, per its financial statements," it said.

Hindenburg cited whistleblower documents to state that "Buch used her personal email to do business using her husband's name while serving as a Whole Time Member of SEBI." "In 2017, weeks ahead of her appointment as SEBI Whole Time Member, she ensured the accounts with ties to Adani 'be registered solely in the name of Dhaval Buch', her husband, as per whistleblower documents. Despite disclaiming control, a private email she sent a year into her SEBI term shows she redeemed stakes in the funds through her husband's name, per the whistleblower documents. This raises the question: What other investments or business has the SEBI Chairperson engaged in through her husband's name while serving in an official capacity?" it asked.

Buch, according to Hindenburg, said her husband used the consulting entities starting in 2019 to transact with unnamed "prominent clients in the Indian industry".

"Finally, will the SEBI Chairperson commit to a full, transparent and public investigation into these issues?", it further asked.

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