SEBI Chief Faces Conflict of Interest Scrutiny

Madhabi Puri Buch, the chairperson of SEBI, is drawing criticism after the latest Hindenburg report. The report claims that she has been promoting real estate investment trusts (REITs) as a great investment option without disclosing her husband’s ties to Blackstone Inc., a key player that has backed two of the four listed REITs in India.

Even though Buch has stated that she sees no conflict of interest regarding her connections to ‘obscure offshore funds’ linked to the Adani scandal, the spotlight is on her other business relations. According to a report by The Morning Context, her links to Blackstone—which has considerable investments in India—are now raising eyebrows about potential conflicts.

A seasoned fund manager pointed out that even if Buch has recused herself from any matters concerning Blackstone, it might not be sufficient considering the scale of Blackstone’s operations in the country. The ongoing scrutiny of the relationship between Blackstone and Hindenburg continues to keep these questions simmering.

SEBI is under pressure to clarify how Buch’s previous role as a private executive might affect her duties as a regulator. Despite Buch claiming she has stepped back from all Blackstone-related topics, it is unclear how extensive her recusal is.

Blackstone is deeply vested in major Indian companies like Care Hospitals, Mphasis, and Aadhar Housing Finance, among others. Reports suggest that Buch’s list of companies from which she has recused herself is still under wraps.

In February, under her leadership, SEBI gave the green light for Aadhar Housing Finance’s IPO, which is backed by Blackstone. Additionally, Blackstone secured a 75% stake in EPL Ltd, formerly Essel Propack Ltd, through a subsidiary between 2019 and 2020.

Dhaval Buch, her husband, became a senior adviser at Blackstone in July 2019. Interestingly, in April 2019, the Ashok Goel Trust bought a substantial amount of Blackstone’s interest. Currently, the trust, which includes Atul Goel in its leadership advisory board, is classified as a public stakeholder but still has a significant holding in EPL.

Furthermore, on August 27, 2021, Madhabi Puri Buch, while serving as a full-time member of SEBI, resolved an insider trading case involving Atul Goel. This raises questions about her earlier claim that she had recusal in place.