Spokesperson: Shri Pawan Khera: He said that New Allegations against SEBI Chief Ms. Madhabi P. Buch. Brief recap of previous allegations against SEBI Chairperson: SEBI Chairperson - Madhabi P. Buch Appointments Whole Time Member of SEBI: 5th April 2017 - 4th October 2021 Chairperson of SEBI: 2nd March 2022 - Present
2nd September 2024: Receiving Income from ICICI Bank 6th September 2024: Rental Income - Conflict of Interest with Wockhardt 10th September 2024: Payment received by Agora Advisory Services Limited 14th September 2024 Trading in Listed Securities and Holding Foreign Assets Additionally, between 2017-2021, she allegedly held foreign assets

New Allegations

1. SEBI Chairperson rented another one of her properties to Green World Buildcon and Infra Private Limited, a company owned by individuals associated with Indiabulls

Madhabi Buch rented out another property of hers to a company associated with an individual connected to the IndiaBulls Group (Indiabulls Group was under SEBI’s Scanner for various cases) Ms. Madhabi Buch owns another flat in Mumbai. In 2021-22, she earned rental income from a property rented out to a company called Green World Buildcon and Infra Private Limited. This company is owned by Mukul and Vipul Bansal. Mukul Bansal has a significant background with Indiabulls Group, being part of its senior management and on the board of several related companies (Annexure 1)

Indiabulls Regulatory Issues: Indiabulls Group, where Mukul Bansal has been involved, has faced several cases with SEBI, with multiple adjudication orders and regulatory actions between 2021 and 2022.

Legal Involvement: Besides SEBI actions, the company has also been involved in cases before other regulators and courts, and SEBI has provided affidavits in those cases. Violations: SEBI’s Code on Conflict of Interest for Members of Board (2008) (Sections 4, 7, and 8)

2. SEBI Chairperson’s holding of Unlisted Shares and its connection with Paradise Papers:

Predible Health Private Limited is a company incorporated on 02 May 2016. As an Initial Shareholder, Ms. Buch has been associated with the company holding equity in it. She continued to hold shares in the company even after becoming a Whole time member of SEBI.

It was during FY 2021-22, she sold the shares to a US company (M/s Nference Inc.) making a return of ~226 times in 5 years. Further, Predible Health Private Limited was a start-up company which received funds under the Startup India initiative of the Government of India. (Annexure 2) Table 1: List of investors in Predible Health Pvt Ltd Sno Name of the Company Address a) Suthirth Vaidya S. BN 189, Rama Priya, Bapuji Nagar Road, Pongumood, Trivandrum, Kerala, India- 695011 b) Abhijith Chunduru 335, M.T.H Road, Moorthy Nagar, Villivakkam, Chennai, TamilNadu, India-600049 c) Deepak Mohan Divyam,T.C-12/2431, Medical College P.O, Trivandrum, Kerala, India-695011 d) Jacesa Investments Limited Trust House, 112, Bonadie Street Kingstone, St. Vincent e) Capria Ventures LLC Trust House, 112, Bonadie Street Kingstone, St. Vincent f) Capria Ventures LLC Trust House, 112, Bonadie Street Kingstone, St. Vincent g) Unitus Seed Fund India II Trust House, 112, Bonadie Street Kingstone, St. Vincent h) IKP Knowledge Park Genome Valley, Park Turkapally Village, Shameerpet, Hyderabad – 500101 Out of the aforesaid investors, M/s Jacesa Investments Limited is based out of St Vincent and The Grenadines that lies in the eastern Caribbean Sea. M/s Jacesa Investments Limited invested in Predible Health Private Limited in 2018 (Table 1) (Annexure 3)

M/s Jacesa’s name is listed in offshore leaks by Paradise Papers (2017) shared by ICIJ. This implies that Jacesa Investments is compromised and needs to be investigated in detail.

3. SEBI Whole Time Member: Ananth Narayan received rental income from a stock-broker employed with a brokerage firm that Narayan regulates by virtue of heading the department that deals with market intermediaries.

Ananth Narayan Gopalkrishnan became a Whole Time Member (WTM) at SEBI on October 10, 2022, handling various regulatory departments. Conflict of Interest - Rental Income: After joining SEBI, he received `64.8 lakhs in rent from a property he owns in Mumbai. The tenant is Thangam Vinod Rajakumar, a stockbroker hired by a brokerage firm called IMC India Securities, which is regulated by SEBI. This suggests a potential conflict of interest since Narayan oversees the regulation of brokers by virtue of being a member of the Market Intermediaries Regulation and Supervision Department (MIRSD)

Violations: SEBI’s Code on Conflict of Interest for Members of Board (2008) (Sections 4, 7, and 8) Conflict of Interest - Shares in Unlisted Companies: Narayan holds shares in the following unlisted company: Proud Securities and Credits Pvt. Ltd (now Incred Capital): He holds 1 lakh shares worth 2 crores. Incred’s valuation is over 8,800 crores, giving his stake a value of around ` 70 crores (0.76% of total equity).

Since Ananth Narayan is a Whole-Time Member of SEBI, and Incred Capital is a market participant regulated by SEBI, holding shares in Incred presents a conflict of interest. This raises the question of whether the selection committee was aware of Mr. Narayan’s shareholding in Incred at the time of his appointment.

Incred, as a market participant, specializes in portfolio management services, Alternative Investment Funds (AIF), and pooled investments, meaning it may have stakes in various companies. Given this, how can Mr. Narayan remain impartial when dealing with cases involving the specific companies that are in the portfolios of Incred, considering his financial interest in Incred? Has he recused himself from any such cases?

Questions

1. Why did Madhabi Puri Buch rent out her property to a company associated with IndiaBulls, which is not only regulated by SEBI but is under SEBI’s scanner for various cases?
2. Why did Madhabi P. Buch hold shares in a conflicted entity that has its connections to the Paradise Papers?
3. Why did the WTM Ananth Narayan rent out his property to a stockbroker? Why does he hold shares in a company that is a major financial service provider regulated by SEBI? Tuesday, October 29, 2024