India’s market regulator, the Securities and Exchange Board of India (SEBI), is facing mounting challenges after several allegations emerged against its chairperson, Madhabi Puri Buch. Known as a trailblazer for being the first woman to lead SEBI, Buch now faces accusations that could undermine the regulator’s credibility.

Key Allegations Against Madhabi Puri Buch

The controversy began in August 2024 when U.S.-based short-seller Hindenburg Research accused Buch and her husband of having investments in an offshore fund linked to the Adani Group. This raised concerns that SEBI was deliberately delaying an investigation into Adani over accusations of accounting fraud and market manipulation. Buch denied any conflict of interest in this case.

Subsequently, India’s Congress party raised more allegations, claiming Buch was earning rental income from a company under SEBI’s investigation. Additionally, they accused her of continuing to receive benefits from ICICI Bank, where she previously held a senior position. ICICI Bank refuted these claims, stating Buch only received her retirement benefits after leaving the bank.

Internal Dissent at SEBI

The internal tension within SEBI reached a boiling point on September 5, 2024, when around 1,000 employees protested outside SEBI’s headquarters, demanding Buch’s resignation. The protesters voiced concerns over a toxic work environment, with reports of public humiliation and intense pressure in meetings. SEBI dismissed these claims as “misguided,” but staff insisted on a retraction of the regulator’s statement.

Industry Reaction and Implications

While the Indian stock market remains strong, bolstered by significant foreign investment and a surge in new retail investors, experts warn that the controversy could escalate, potentially affecting market stability. Some believe that Buch’s tenure, set to end in February 2025, may not be renewed.

Veteran analysts, including Hemindra Hazari and Subhash Garg, have called for greater transparency and action from the government, stating that the situation demands a credible investigation. While the government has remained silent so far, global investors are closely watching how the issue is handled, as it could affect investor sentiment in India’s markets.

Conclusion

The controversy surrounding Madhabi Puri Buch and SEBI highlights the need for stronger regulatory disclosure and compliance norms. As one of the world’s top-performing equity markets, India must ensure its regulatory bodies remain transparent and accountable to maintain investor confidence.