House audit watchdog likely to summon SEBI chief; move likely to be challenged

Parliament’s audit watchdog Public Accounts Committee (PAC) was likely to summon Securities Exchange Board of India (SEBI) chief Madhabi Buch for “a performance review” of the stock market regulator even as the move may be challenged on technical grounds, people aware of the matter said on Friday.

Congress lawmaker K C Venugopal-led PAC has finalised 161 subjects, including “performance review of regulatory bodies established by Acts of Parliament”, to be taken up for the next five years. SEBI officials and Buch could be summoned as part of the review of regulatory bodies.

The PAC is scheduled to meet next on September 10 and scheduled to take up a performance audit on the National Rural Drinking Water Programme (Jal Jeevan Mission) based on a 2018 Comptroller and Auditor General (CAG) report.

Bharatiya Janata Party (BJP) leader and PAC member Nishikant Dubey said the PAC chairman has full authority to hold the panel’s meetings, but the rules governing the watchdog say all members have a veto power. Dubey pointed out that performance reviews of any institution or department can only happen based on the CAG report.

The PAC was expected to summon Buch weeks after US-based short-seller Hindenburg Research accused the SEBI chief and her husband Dhaval Buch of having a stake in obscure offshore entities used in “the Adani money siphoning scandal”. The allegations triggered a political row with the Congress demanding a parliamentary probe into them.

In 2023, Hindenburg accused the Adani Group of stock price manipulation. The US-based short seller alleged that Madhabi Puri Buch, who is in charge of probing the allegations, had a stake in obscure offshore entities used for the purpose.

Hindenburg Research cited documents from a whistleblower and alleged the Buchs held stakes in offshore Bermuda and Mauritius funds via complex structures. It alleged that Dhaval Buch wrote to a Mauritius fund administrator to make him the “sole person authorised to operate the accounts” weeks before Madhabi Puri Buch’s appointment as a whole-time SEBI member in 2017.

Hindenburg’s January 2023 report accused Adani Group of using tax havens and stock manipulation. It led to a $150 billion sell-off in the conglomerate’s stocks, which have since recovered partially. The report prompted an ongoing SEBI inquiry.

The Adani Group dismissed latest the charges against it as “malicious, mischievous, and manipulative selections of publicly available information”.

The Buchs cited SEBI’s action and show cause notice to the American investment research firm focussed on activist short-selling and added that Hindenburg chose to attempt “character assassination” in response to that.