In violation of regulator’s rules, SEBI chief continued to earn from her firm

Over her seven-year tenure as the head of the Securities and Exchange Board of India, Madhabi Buch continued to receive payments from her consulting business, possibly in violation of rules governing regulatory officers, as Reuters revealed on Friday.

Before joining SEBI, Buch set up two businesses: Agora Partners, an offshore Singaporean consulting firm, and Agora Advisory, an Indian consulting firm. This was flagged by American short-seller Hindenburg Research in a report published on August 10.

Buch and her husband Dhaval stated in their response to the report that the two companies had "immediately become dormant" upon her appointment as a SEBI member. “These companies [and her shareholding in them] were explicitly part of her disclosures to SEBI,” the Buchs said in their statement on August 11.

After joining SEBI in 2017, Madhabi Buch was named chief in March 2022. A 2008 SEBI guideline states that market regulator officials are not allowed to hold profit-making positions or receive salary or professional fees from other professional activities, according to Reuters.

Despite having resigned as a director of Agora Advisory in 2017, Madhabi Buch maintained a 99% ownership in the company until March 2024, according to documents submitted with the Registrar of Companies, as first reported by Scroll. Dhaval Buch, her husband, had taken her place, Scroll.in reported.

According to Scroll, which cited records from the Registrar of Companies, Agora Advisory was active from 2019 to 2024 and generated revenue of Rs 3.63 crore.

In her statement on August 11, Madhabi Buch had stated that upon his retirement from Unilever in 2019, her husband had used the two companies for his consultancy business. Citing records submitted by the Registrar of Companies, Reuters reported on Friday that Agora Advisory was operational from 2017 to 2024 and generated $442,025 (about Rs 3.7 crore) in income.

As per the Hindenburg report, Madhabi Buch retained a 100% ownership position in Agora Partners till March 2022. Two weeks after being appointed as the SEBI chief she gave her husband the shares.

According to company records for the 2023–2024 fiscal year, Madhabi Buch is still the owner of Agora Advisory shares, according to Reuters. Following Madhabi Buch's appointment to the regulator, "there was no justification for her to continue to own the firm," according to Subhash Chandra Garg, a former finance secretary of India and member of the SEBI board.

“She could not have been allowed even after making disclosures,” Garg was quoted as saying. “This makes her position completely untenable at the regulator.”