The Securities and Exchange Board of India (SEBI) is the apex regulator for the securities market with a preamble that affirms its commitment “to protect the interests of investors in securities and to promote the development of, and to regulate the securities market.”

In February 2022, the Government announced the appointment of Madhabi Puri Buch, who was at the time a Whole Time Member on the SEBI board, as the first woman to head the securities markets regulator.

An Indian Institute of Management, Ahmedabad alumna with a graduate degree in Mathematics from St. Stephen’s College, New Delhi, Ms. Buch is also one of the youngest chiefs at SEBI, taking the helm from her predecessor in March 2022, when she was about 56.

A veteran of the investment banking and financial services industry, who at one-time headed ICICI Securities as its MD &CEO, Ms. Buch was expected to bring vital industry perspective to her job of regulating the markets and securities issuances while ensuring that investor protection was always accorded the highest priority.

A protege of N. Vaghul and subsequently K.V. Kamath during her years at ICICI, Ms. Buch even had a stint as a consultant to the Shanghai-based BRICS-established New Development Bank, which Mr. Kamath led for a while.

First test

Less than a year into her job at SEBI’s helm, Ms. Buch faced her first stern test of regulatory stewardship when, in January 2023, U.S. short-seller Hindenburg Research levelled exhaustive charges of stock price manipulation and accounting fraud against the Adani Group of companies.

With the prices of all the listed Adani Group entities nosediving in the wake of the Hindenburg allegations, hundreds of crores of investor wealth was wiped out in just a matter of a few trading sessions, sparking a series of petitions in the country’s top court seeking judicial intervention.

In early March 2023, the Supreme Court ordered the formation of a committee to look into possible regulatory failure in dealing with the allegations that the Adani Group firms flouted norms in the securities market.

Clean chit

And in May, the court-appointed panel returned a finding that it could not conclude there had been regulatory failure.

It also cited the various investigations SEBI had been conducting since as far back as October 2020 into the ownership of 13 entities tied to allegations in the Hindenburg report about minimum public shareholding, adding that the markets watchdog’s probe into the entities’ final ownership had drawn a blank.

So, when on August 10 this year Hindenburg fired a fresh salvo, this time levelling charges against Ms. Buch of conflicts of interest including having invested in a Mauritius-based offshore fund with links to the Adanis, all hell broke loose.

The SEBI Chairperson and her husband Dhaval Buch, a supply chain specialist who had served as FMCG major Unilever’s global chief procurement officer before retiring, issued two back-to-back statements in response to the short seller’s allegations seeking to clear the air.

In the first statement, the Buch couple asserted: “In the context of allegations made... against us, we would like to state that we strongly deny the baseless allegations and insinuations. The same are devoid of any truth. Our life and finances are an open book. All disclosures as required have already been furnished to SEBI over the years. We have no hesitation in disclosing any and all financial documents, including those that relate to the period when we were strictly private citizens, to any and every authority that may seek them.”

The markets watchdog, for its part, also issued an exhaustive statement on August 11 in which it emphasised that “relevant disclosures required in terms of holdings of securities and their transfers have been made by the Chairperson from time to time. Chairperson has also recused herself in matters involving potential conflicts of interest”.

People with knowledge of SEBI’s inner workings stressed that Ms. Buch had at no point in time sought to influence any of the multiple investigations being carried out by the markets watchdog.

“She can be very aggressive in her approach to getting work done and demanding results,” said a former member of one of the several committees SEBI uses in its consultative process to craft and fine tune policies and the overall regulatory environment.

“And yes, that level of abrasiveness is a clear failing. However, most of her former ICICI group colleagues appreciate and vouch for her personal integrity,” the person added, speaking on the condition of anonymity.

Ms. Buch is also facing a groundswell of internal restiveness in SEBI, with a grouping of officers questioning the “mistrust and lack of respect shown at the highest level towards employees”.

“She is facing a real media trial with the Opposition also deciding to target her to get at the government,” says a former banker. “Also, there are several regulatory measures that SEBI has taken and is planning that a group of market players are strongly opposed to. They too will be happy to see her fall,” the banker added.

Tightening norms

Among the measures tightening norms is a SEBI guideline that took effect on September 9 requiring all Foreign Portfolio Investors (FPIs) with more than 50% global exposure to India or holding ₹25,000 crore investment in Indian equities to disclose all granular details on the ultimate beneficiary of the fund to the regulator. Failing which, the FPI would have to liquidate and rebalance its holdings to comply with the threshold specified by SEBI. And another proposal aims to tighten guidelines for derivatives trading.

“For the sake of the institution and investor faith in the markets regulator, it will, however, be best if an independent review is conducted at the earliest to clear the air on everything related to the SEBI chief,” said another former SEBI official. “This is something that will surely be in her interest too, especially given the statement asserting that her life is an “open book”,” the person added.