Lokpal of India’s Order – Key Points

Three complaints were filed against Ms. Madhabi Puri Buch, the former Chairperson of SEBI, based primarily on allegations stemming from the second Hindenburg Report dated 10 August 2024. These complaints alleged corruption, conflict of interest, and quid pro quo arrangements related to her role at SEBI and her interactions with certain regulated entities, including the Adani Group.

Key Allegations Raised

1. Investment Conflict
Ms. Buch and her husband allegedly invested in a fund linked to Adani Group entities under SEBI investigation, without disclosing this investment.

2. Quid Pro Quo Arrangements
It was alleged that Buch’s firms received consultancy fees from companies such as Mahindra, Blackstone, and Wockhardt, which were under SEBI scrutiny at the time.

3. Undue Advantage from ESOPs
She was accused of timing the sale of ICICI Bank ESOPs for maximum gain, despite SEBI having ongoing investigations involving the bank.

4. Concealment and Redaction
She allegedly withheld key documents from the Supreme Court-appointed Expert Committee investigating Adani stock manipulation.

5. Improper Recusals
Although she claimed to have recused herself from certain matters, it was alleged that she continued to influence SEBI’s decision-making processes.

Lokpal’s Findings

No Prima Facie Case for Investigation

• The Lokpal found no credible evidence of any “undue advantage” or “quid pro quo.”
• SEBI’s actions, including investigations into Adani and other entities, were validated by the Supreme Court and handled through independent institutional processes.
• Past investments and consultancy earnings were found to be adequately disclosed, legitimate, and outside the scope of anti-corruption laws.
• The Hindenburg Report, authored by a known short-seller, was deemed unreliable and insufficient to base any corruption proceedings on.

Conclusion

• All three complaints were dismissed.
• The allegations were deemed vexatious, frivolous, and politically motivated attempts to sensationalise regulatory matters.
• The complainants were indirectly cautioned for attempting to trivialise the complaint mechanism.

Adani’s Perspective

1. Total Exoneration by a Constitutional Authority
The Lokpal’s order confirms that allegations of regulatory favouritism involving the Adani Group were entirely baseless.

Page: 35–36 | Paragraph: 33–34
“Having so done, we have concluded that the allegations in the Complaint(s) are more on presumptions and assumptions and not supported by any verifiable material and do not attract the ingredients of the offences in Part III of the Act of 1988, so as to direct an investigation therefor.”
“Accordingly, these complaints are disposed of.”

2. Upholding SEBI’s Integrity
SEBI’s regulatory decisions, especially those concerning the Adani Group, were upheld by both the Supreme Court and the Lokpal.

Page: 10–11 | Paragraph: 16
“…the effectiveness of the investigations and action taken by SEBI against the Adani Group of companies has commended to the Supreme Court. That cannot be reopened directly or indirectly…”

3. Dismissal of the Hindenburg Report as Inadmissible
The Lokpal regarded the Hindenburg Report as partisan and unreliable, unfit to serve as the basis for a corruption probe.

Page: 35 | Paragraph: 32
“The complaint(s)… were essentially founded on the Hindenburg Report… that report by itself cannot be made the sole basis to escalate action against the RPS… allegations… are untenable, unsubstantiated and bordering on frivolity.”

4. Adani Group as Collateral Damage
The Lokpal’s observations imply that politically motivated complaints against regulators were a veiled attack on the Adani Group.

Page: 29 | Paragraph: 24
“The Complainant(s) by making such unverified and flimsy or fragile allegations, only to sensationalize or so to say politicize the matter, has inevitably trivialised the process before the Lokpal. It is nothing short of vexatious proceedings…”

5. Vindication of Market Conduct
No evidence of wrongdoing or market manipulation by Adani Group companies was found by any competent authority — SEBI, the Supreme Court, or the Lokpal.

Page: 10–11 | Paragraph: 16
“…the named RPS and her husband were only passive investors… had no control… no connection with… Adani Group shares, as has been revealed in the investigations.”

6. Rule of Law and Due Process Upheld
The order reinforces the importance of due process and serves as a precedent against media trials, speculative foreign reports, and unverified complaints.

Page: 35 | Paragraph: 33
“…we have followed the test enunciated by the Constitution Bench… in Lalita Kumari… the allegations… not supported by any verifiable material…”

7. Corporate Governance Strengthened
By reaffirming SEBI’s institutional credibility and rejecting conflict of interest claims, the Lokpal’s order strengthens investor confidence in Indian markets.

Page: 32–33 | Paragraph: 27
“…the RPS had already disclosed her interest in ICICI Bank at the time of joining SEBI… never dealt with any case pertaining to ICICI Bank… allegation of conflict of interest… is completely devoid of substance.”

Team Maverick.