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Topic : Hindenburg vs SEBI Chief
GS-3 Mains : Economy
Context
Hindenburg Research accuses SEBI Chairperson Madhabi Puri Buch of conflict of interest and bias in Adani Group investigation.
Allegations against SEBI Chief
- Buch and husband Dhaval Buch had hidden stakes in offshore funds (Bermuda, Mauritius).
- Buch founded Agora Partners in 2013, didn’t transfer Singapore unit stake till March 2022 (after becoming SEBI chief), violating SEBI code.
- Dhaval Buch appointed senior advisor at Blackstone in 2019 despite lacking experience.
Developments
- Supreme Court ordered SEBI to complete investigations and issue show-cause notice to Hindenburg.
- SEBI completed one investigation, nearing completion of second, rejecting external probe.
- SEBI criticized Hindenburg for undermining credibility, outlined ongoing actions.
Ethics Codes (Comparison)
- US: Standards of Ethical Conduct, Supplemental Standards, Personal Trading Compliance System (PTCS).
- UK: Disclosure Requirements, Reporting.
- SEBI: Definition of Conflict of Interest, Holdings Disclosure, Substantial Transactions, Unpublished Price Sensitive Information, Restrictions on Positions, Gifts, and Past/Current Roles.
Managing Conflicts of Interest (SEBI)
- General principle: Avoid conflicts affecting decisions, no personal advantage from relationships.
- Disclosures and recusals: Early disclosure, recusal for conflicted members, seeking clarification from Chairman/Board.
- Confidentiality: Disclosure information confidential, but public can submit evidence to board secretary.
Key Points
- Hindenburg alleges conflict of interest and bias by SEBI chief.
- SEBI denies allegations, investigations ongoing.
- Comparison of ethics codes highlights differences in regulations.
- SEBI has mechanisms to manage conflicts of interest
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