Having responded to Hindenburg Research’s latest report, the Securities and Exchange Board of India (SEBI), its chairperson Madhabi Puri Buch as well as her spouse Dhaval Buch have landed in a situation where in they can hardly do nothing against the shortseller who is not within the legal ambit of the country.

Considering this fact, they are believed to have been advised to ignore the allegations and refrain from getting engaged with the shortseller, which is seen changing its goalpost.

“The matter is not going to go anywhere. This time the allegations are not that strong as compared with the report concerning Adani and it comes from a party that was issued with a show-cause notice. So, the motive seems be clear to discredit the regulator and get away,” said a legal expert asking not to be named.  “Unless Hindenburg has something more to reveal and release papers in batches, the matter will die down. But the Opposition has got a weapon to target the government,” the legal expert added.

According to SEBI officials, the importance given to the report is ‘disproportionate’ and questioning the institutional integrity of the regulator is ‘unfortunate’. 

They said SEBI had built its credibility over the years and had a robust framework. “Unfortunately, these baseless allegations are believed as gospel of truth and that is why Hindenburg will continue its act,” they added. Unless its reports are ignored, the shortseller will keep targeting the institutions and the economy, they opined.

A former executive director at SEBI said, “It is impossible for the SEBI chairperson to influence the policies and decisions at SEBI. The institution has built a robust mechanism. The allegations are baseless and better ignored.”

A former SEBI top official wondered whether the SEBI and its chairperson had explained the matter to the Finance Ministry and clarified their stance.  He said ultimately the government must be aware of the facts as it would have to answer in Parliament. Since SEBI was created by an Act of Parliament and its administrative ministry is the Finance Ministry, all communications should have been made to the relevant authorities rather than responding to Hindenburg and the media, the former official said.   “It is SEBI’s job is to stay clear. All communications with the government should be confidential. SEBI is answerable to Parliament and Finance Minister. The Chairperson is appointed by the Finance Minister after clearance from the Cabinet Committee, so taking the government into confidence is important,” he added.

It is believed that Ms. Buch will continue till the end of her tenure, that is March 2025, as the government is unlikely to succumb to the pressure of Hindenburg and the combined opposition.