The ACB filed an FIR against Buch, mandated by a special court, just a day after her departure from SEBI on 28 February.
Published Mar 02, 2025 | 9:02 PM ⚊ Updated Mar 02, 2025 | 9:02 PM
Former SEBI chairperson Madhabi Puri Buch
Synopsis: A special Mumbai court has ordered an investigation into former SEBI chairperson Madhabi Puri Buch and five officials over alleged stock market fraud and regulatory violations, following her controversial three-year tenure. Buch faced multiple allegations including conflicts of interest related to the Adani Group investigation, income from her consultancy firm during her SEBI tenure, and corporate payments to her husband.
The Anti-Corruption Bureau (ACB) has registered an FIR against former Securities and Exchange Board of India (SEBI) chairperson Madhabi Puri Buch and five other officials over alleged stock market fraud and regulatory violations, following a special court directive on 1 March.
The court ruling, coming just a day after Buch’s departure from SEBI on 28 February, noted that “there is prima facie evidence of regulatory lapses and collusion, requiring a fair and impartial probe,” according to a report by the Hindu.
The original complaint alleged large scale financial fraud, regulatory violations and corruption involving the fraudulent listing of a company on the stock exchange.
It claimed that SEBI officials “failed in their statutory duty, facilitated market manipulation, and enabled corporate fraud by allowing the listing of a company that did not meet the prescribed norms.”
The final year of Buch’s three-year tenure at SEBI has been controversial, with separate allegations including conflicts of interest related to the Adani Group investigation, income from her consultancy firm during her SEBI tenure, and corporate payments to her husband while she led the market regulator.
Notably, SEBI conducted her farewell virtually rather than through a formal ceremony. While officially attributed to health reasons, reports suggest officials chose the virtual format to avoid media scrutiny given the separate controversies.
Former finance secretary Tuhin Kanta Pandey has been appointed as her replacement for a three-year term.
An alumnus of the Indian Institute of Management Ahmedabad, the youngest and first female chairperson to lead SEBI, Buch initially earned recognition as a pioneering figure.
While credited with implementing stricter insider trading rules and strengthening auditing frameworks, mounting allegations of the very practices she was tasked with preventing increasingly overshadowed Buch’s tenure.
In August 2024, Hindenburg Research, a now-defunct United States-based short seller, accused Buch and her husband of having undisclosed investments in offshore entities linked to Vinod Adani, elder brother of Gautam Adani.
The report alleged that SEBI, under Buch’s leadership, failed to thoroughly investigate allegations of stock price manipulation and opaque foreign investments in Adani’s listed entities.
Hindenburg claimed that Vinod Adani controlled a series of offshore shell companies potentially used for stock price inflation, suggesting Buch’s past professional associations might have influenced SEBI’s handling of the case.
Both the Adani Group and SEBI denied the allegations in separate statements, with the former labelling them “baseless and politically motivated.”
Soon after the Adani allegations surfaced, Reuters reported that Buch’s consultancy firm, Agora Advisory Private Limited (Pvt Ltd), had earned approximately ₹37.1 million ($450,000) during her tenure at SEBI.
SEBI regulations explicitly prohibit its officials from holding an office of profit or receiving earnings from external business activities while in service.
SEBI’s policy mandates that all outside engagements must be disclosed and approved by the regulatory body, raising questions about whether Buch had fully complied with disclosure requirements.
In response, Buch clarified that her husband, after his retirement, managed Agora Advisory, and that she had stepped down from all operational roles before assuming office as SEBI chairperson.
Nevertheless, questions over a clear conflict of interest, as her firm remained operationally active while she led the financial market regulator, remained.
Another major allegation was Buch receiving payments from ICICI Bank after her retirement, potentially constituting a breach of ethics and conflict of interest.
The Congress alleged that Buch, who previously held a senior position at ICICI Securities, continued to receive financial benefits from ICICI Bank even after taking charge at SEBI.
ICICI Bank issued a statement refuting these claims, clarifying that Buch did not receive any salary or Employee Stock Ownership Plans (ESOPs) post-retirement, except for standard retirement benefits in line with industry norms.
The Bharatiya Janata Party (BJP)-led Union government also dismissed the allegations, with a source quoted in India Today stating that Buch had undergone multiple rounds of vetting before being appointed SEBI chief, and no irregularities were found in her financial records.
In September 2024, reports emerged that several large corporate firms, including Mahindra & Mahindra and Dr Reddy’s Laboratories, had made financial payments to Buch’s husband while she was serving as SEBI chairperson.
According to the report, Mahindra & Mahindra alone had paid ₹3.2 million ($38,500) to Buch’s husband for consultancy services. These transactions triggered questions about whether these companies had received regulatory benefits from SEBI in exchange for these payments.
Both Mahindra & Mahindra and Dr Reddy’s denied any wrongdoing, stating that the payments were for legitimate professional services rendered by Buch’s husband independent of SEBI’s functioning.
Beyond the external controversies, Buch’s leadership style also came under scrutiny when over 1,000 SEBI employees launched an unprecedented protest in September 2024, alleging a toxic work culture under her leadership.
Employee grievances included accusations of unprofessional behaviour from top officials, with allegations that Buch used harsh language and intimidation tactics.
Staff also complained about unrealistic performance targets leading to a stressful work environment and over-surveillance of employees, including invasive tracking of work hours.
SEBI denied these allegations, asserting that the protest was influenced by external factors and did not reflect broader employee sentiment.
The agency further asserted that its internal review found no evidence of systemic toxicity in the workplace.
(Edited by Dese Gowda)
