The Wire Staff 
New Delhi: Madhabi Puri Buch’s 99% shareholding in a consultancy firm that earned Rs 3.71 crore in the seven years since she became a whole-time member of the Securities and Exchange Board of India (SEBI) potentially violates the market regulator’s conflict of interest policy, Reuters reported.
The news agency reported the earnings of the consultancy firm, Agora Advisory Private Limited, citing public documents from India’s Registrar of Companies.
Buch, on whose part the short-seller Hindenburg Research has alleged a “massive conflict of interest” in probing the Adani group owing to investments she and her husband made in an offshore fund structure – owns a 99% share in Agora Advisory, Reuters reported.
Hindenburg has also cited documents saying Buch was 99% shareholder in Agora Advisory as of March 31 this year.
SEBI’s code of conflicts of interest for members of its board – which Buch is part of as SEBI chairperson – says its whole-time members “shall not hold any other office of profit”.
They are also prohibited from “[engaging] in any other professional activity, which entails receipt of salary or professional fees”.
In its August 10 report, Hindenburg also said Buch was a 100% shareholder in a Singapore-based consultancy company called Agora Partners until as recently as March 16, 2022 – two weeks after she became SEBI chair – when she transferred her stake to her husband.
The short-seller said it was unknown how much revenue Agora Partners earned because the company is exempt from disclosing this information.
Buch set up both Agora Advisory and Agora Partners before she joined SEBI as a whole-time member in 2017.
Reuters reported that Buch’s shareholdings possibly violate SEBI’s code of conflicts of interest for its board members.
Subash Chandra Garg, a former economic affairs secretary who served as SEBI board member along with Buch, told Reuters there was “no justification for her to continue to own the firm after she joined the board”. “She could not have been allowed even after making disclosures.”
Garg also told the news agency that Buch’s equity in Agora Advisory and its continued earnings constituted a “very serious” breach of conduct. “This makes her position completely untenable at the regulator,” he also said.
In her response to Hindenburg’s report, Buch and her husband Dhaval said both Agora Advisory and Agora Partners “became immediately dormant on her appointment with SEBI”.
“These companies (and their shareholding in them) were explicitly part of her disclosures to SEBI,” Buch and her husband said on August 11.
Buch has not clarified whether she was given a waiver to keep her shareholding in Agora Advisory, Reuters’s report said.
According to Hindenburg, the overseas fund structure Buch and her husband invested in were also “used by Vinod Adani in the alleged Adani cash siphoning scandal”.
SEBI said on August 11 that that “relevant disclosures required in terms of holdings of securities and their transfers have been made by the chairperson [Buch] from time to time” and that she “has also recused herself in matters involving potential conflicts of interest”.
A report by Scroll said that Agora Advisory shared the same address as its auditor, with experts it spoke to describing this as a “shady” and a “lazy” practice usually restricted to the informal sector.