Madhabi Puri Buch, the first female head of India’s Securities and Exchange Board of India (SEBI), is embroiled in a significant controversy.
Once celebrated for breaking barriers, Buch now faces mounting allegations of fostering a toxic work environment, conflicts of interest, and corruption.
The unfolding drama includes protests by SEBI employees, political accusations from the main opposition Congress party, and scrutiny from Hindenburg Research, all of which threaten to undermine her position at the helm of India’s financial regulatory body.
SEBI employees say Buch fosters ‘toxic work culture’
On Thursday, approximately 200 SEBI employees protested at the regulator’s Mumbai headquarters, marking a notable peak in growing internal discontent.
The protest was triggered by a recent SEBI press release that dismissed complaints about an unprofessional work culture as “misguided by external elements.”
Employees demanded Buch’s resignation and the retraction of the press release, highlighting unprecedented unrest within the organization.
The Economic Times reported a written complaint from SEBI officials to the Finance Ministry, accusing Buch of cultivating a “toxic work culture.”
The letter, titled “Grievances of SEBI Officers – A Call for Respect,” alleged that Buch employed “harsh and unprofessional language” and imposed “unrealistic work targets with changing goalposts,” severely affecting employees’ mental health and work-life balance.
SEBI has countered these allegations, suggesting that junior officers are being influenced by “external forces” to publicize their grievances.
Despite SEBI’s defense, the allegations have only fueled further discontent, with calls for Buch’s resignation growing louder.
Congress raises conflict of interest
Compounding the issue, the Congress party has accused Buch of a conflict of interest involving ICICI Bank (NS:ICBK).
They claim Buch received Rs 16.8 crore in benefits from the bank while serving as SEBI chairperson, raising questions about the disparity between her retirement benefits and salary.
The party has called for an independent inquiry into her actions, citing concerns about the integrity of India’s stock markets.
Buch’s troubles are further exacerbated by allegations from Hindenburg Research, which accused her and her husband of holding stakes in offshore funds allegedly used to inflate Adani Group stocks.
Hindenburg Research claims SEBI hesitated to act on its report due to these alleged connections, raising additional concerns about conflicts of interest.
Adding to the tumult, Subhash Chandra, chairman emeritus of Zee Entertainment (NS:ZEE) Enterprises, has accused Buch of corruption.
Chandra alleged that Buch pressured mutual funds to deny an extension on loan repayments, harming his business interests.
He accused Buch of exerting pressure on mutual funds to deny the extension and of imposing penalties on those who considered it.
Despite his repeated appeals for more time, Chandra claimed that Buch consistently dismissed his requests, which he believes was part of a deliberate effort against his company.
SEBI’s investigation last year accused ZEE of diverting Rs 200 crore through related-party transactions.
He declared that he would work not with SEBI anymore in his capacity. He also urged Zee to stop cooperating with the body saying a “biased investigation” was being carried out with the “pre-conceived mindset of SEBI chairperson”.
How have experts reacted?
The mounting allegations against the SEBI chairperson have evoked both sympathy and pertinent questions.
Some market watchers are hinting at a possible foul play, considering the quick succession in which the allegations have been raised from different quarters.
“Allegations against SEBI Chief #MadhabiPuriBuch coming from 4 quarters in quick succession: Hindenburg (Adani conflict), Pawan Khera, INC (ICICI pay), Subhas Chandra, Zee (Corruption), Employees (toxic culture) Coincidence / Conspiracy. Anyone smell a rat?” Lloyd Mathias, independent director, and former marketing head of HP Asia posted on ‘X’.
Lloyd Mathias@LloydMathias·FollowAllegations against SEBI Chief #MadhabiPuriBuch coming from 4 quarters in quick succession: • Hindenburg (Adani conflict) • Pawan Khera, INC (ICICI pay) • Subhas Chandra, Zee (Corruption) • Employees (toxic culture) Coincidence / Conspiracy. Anyone smell a rat?
10:27 PM · Sep 4, 202435ReplyCopy linkRead 17 replies
Senior financial journalist Sucheta Dalal said on the ICICI issue that in the seven years since Buch became SEBI’s chairperson, the regulator has tightened disclosure norms across corporate India, particularly under LODR and insider trading rules.
However, concerns have emerged regarding her lack of disclosure about earnings and the encashment of ESOPs from her previous employer.
This, Dalal said, raises questions about whether a regulatory leader should retain claims on ESOPs a decade after leaving an organization and why SEBI, despite its experience, lacks robust mechanisms to address such potential conflicts of interest.
Dalal said the charges leveled by multiple sources and the ensuing debate underscores the need for SEBI to re-examine its internal policies, ensuring they meet the rigorous standards expected of a modern, transparent regulatory body.
“Only then can it maintain the public trust that is essential to its role as the guardian of India’s financial markets,” she said.
Many experts have also downplayed the Hindenburg allegations.
Sudip Bandhyopadhyay, a seasoned market expert told CNBC-TV18 that the Hindenburg allegations held little merit beyond questioning whether the SEBI chairperson should have recused herself from an earlier investigation.
He suggested the report was more of an attempt to create market confusion and panic rather than address any substantive issue.
However, with mounting pressure from both internal and external sources, Buch’s leadership at SEBI is under intense scrutiny. As the situation unfolds, her future at the helm of India’s market regulator remains uncertain.
This article first appeared on Invezz.com
