SEBI Chairperson Madhabi Puri Buch is facing fresh criticism following allegations that she violated SEBI’s conflict of interest code by trading in listed securities and holding foreign assets, including investments in Chinese funds. Congress, along with allies, claims Buch’s investments between 2017 and 2023, during her tenure at SEBI, raise serious ethical questions. These allegations come amid growing concerns about her financial activities while serving as a regulator. Buch, in response, has denied any wrongdoing, asserting that her involvement with the consultancy firm Agora Advisory and other claims are without merit. The controversy has sparked a political storm, calling into question the regulator's integrity.

Allegations Against SEBI Chairperson

Congress Accuses Buch of Conflict of Interest
On September 14, Madhabi Puri Buch, the Chairperson of SEBI, faced criticism from Congress and its allies, accusing her of violating SEBI’s Code on Conflict of Interest. The allegations stem from claims that Buch traded in listed securities worth Rs 36.9 crore between 2017 and 2023, during her tenure as both a whole-time member and Chairperson of SEBI. Congress argues that this trading activity contravenes Section 6 of SEBI’s conflict of interest guidelines, which are designed to maintain impartiality in market regulation.

Concerns Over Foreign Investments

Investments in Chinese Funds Questioned
One of the core allegations leveled by Congress is that Buch held foreign assets, including investments in U.S. and Chinese funds, during her time at SEBI. Specifically, between 2021 and 2024, she invested in several funds, including the Vanguard Total Stock Market ETF (VTI), ARK Innovation ETF (ARKK), Global X MSCI China Consumer (CHIQ), and Invesco China Technology ETF (CQQQ). Congress has expressed concerns about her investments in Chinese markets, questioning whether these activities align with her regulatory responsibilities as SEBI Chair.

Calls for Transparency in Asset Declarations
Congress has also raised issues regarding the timing and disclosure of Buch’s foreign assets. The party has demanded clarity on when Buch first declared her foreign investments and to which government agency. Additionally, Congress has questioned her involvement with Agora Partners PTE, a Singapore-based firm, asking whether she acted as a signatory to its bank account and if any conflicts of interest arise from this association.

Political Reaction and Criticism

Shiv Sena MP Raises Concerns
In addition to Congress, Priyanka Chaturvedi, a Rajya Sabha MP and Deputy Leader of Shiv Sena UBT, voiced her concerns over Buch’s financial activities. Chaturvedi took to social media, asking whether Buch believed her investments in Chinese markets, stock trading, advisory fees, and multiple salaries were not in conflict with her position as SEBI Chair. This reflects a growing chorus of political figures questioning Buch's ethical standing as the head of India’s market regulator.

Buch's Defense and Clarification

Personal Clarifications by Buch and Husband
In response to the mounting allegations, Buch and her husband, Dhaval Buch, issued a statement clarifying their position. They emphasized that Madhabi Puri Buch has never handled any matters related to Agora Advisory or the business groups implicated in the recent allegations since joining SEBI. This statement was aimed at dispelling doubts regarding her involvement with the Singapore-based consultancy and addressing concerns over potential conflicts of interest.

Ongoing Controversy and Investigation
Despite the clarification, the controversy surrounding Buch has not subsided. The allegations of conflict of interest continue to raise questions about the ethical standards expected of individuals holding high-ranking regulatory positions. With both political and financial stakeholders closely monitoring the situation, it remains to be seen how the regulatory and legal framework will address these claims.

Implications for SEBI and Market Regulation

Impact on SEBI’s Reputation
The allegations against Buch, whether substantiated or not, have potential ramifications for SEBI’s credibility as India’s primary market regulator. If proven true, such conflicts of interest could undermine the institution's integrity, eroding investor confidence in the fairness and transparency of India’s capital markets. SEBI’s leadership may face increased scrutiny, and calls for reform in governance standards may intensify in the wake of this controversy.

Future of Market Oversight
As the situation unfolds, the case of Madhabi Puri Buch underscores the importance of strong regulatory oversight and ethical standards in market regulation. The controversy serves as a reminder that regulators must maintain stringent adherence to conflict of interest policies to ensure that they remain impartial and act in the best interest of market participants and the public. This case could prompt a reevaluation of SEBI’s conflict of interest guidelines and their enforcement mechanisms.