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Writer's pictureBalu Narayan

HINDENBURG CAMPAIGN .. going back ..going forward

Updated: Aug 16



I wrote two blogs earlier on this subject . But I sense that the matter has really come to a close now. Since the matter has traversed from business analysis to a more personal take down of select personalities. Sometimes, arguments come to an end when there is nothing new being said. So it's time for a summation here ! What are the three latest pillars of the latest H argument ? It is that 1. SEBI chairperson invested in a obscure fund when she was a private citizen. This obscure fund had other investors with a shady background. Hence, the allegation is that she is guilty by association.

2. This obscure fund had a dominant share holder representing a business family in the center of the storm. (The allegation is that this was one of the funds used for share price manipulation) The main allegation is that this obscure fund was not investigated because it would have revealed her investment mentioned above, although she was a private citizen.

3. The third allegation is that she being a Whole-time Director (she became Chairperson subsequently), she was part of several decisions related to policy & guidelines favoring some of the funds like Blackstone which was in fields like real estate. Therefore, the allegation concludes that this was a conflict of interest, not avoided.

What are the rights and duties of a private citizen? Can this private citizen look into the future and so avoid any making any current investments ? Yes, the issue of investigation of the funds could be an issue, never mind that the fund managers state that no investment were made in the target company's shares. But alleging guilt by association is very much akin to character assassination.

All this is way back, before she was connected with SEBI since its only later that she joined the board and later became the Chairperson. There are other problems in accepting the allegations. Can a private person go back and undo some acts in the past or ask their spouse to disconnect with business ifor fear of being some decisions seen to be partial ? What about the right to livelihood, anyway? Such issues arise because of the trend whereby corporate leaders are coming into institutions & government & are thereby exposed to the politics of the day. It is plain dangerous to link conflict of interest with acts of the past. The crucible test should be that of plain wrong doing after you take office. Otherwise, virtually everyone is under the scanner and no one will want to be part of this ordeal.


The biggest issue I have with the latest H salvo is that it does focus of earlier accusations and goes off into a tangent, accusing the institutions not doing their job. An onlooker could say that these questions to an individual are more like innuendos since they are 'Damned if you answer (because it shows substance in allegations) , & damned if you don't (because it shows guilt, anyway)! The health of institutions cannot be discussed in a debate where there is currently, more heat than light. It is a pity that the broader discussion of corporate governance practices leading to setting up of higher standards is ended up in this cul-de-sac. Except for news and social media, there are no positive takeaways for the share market, its regulators and the economy in general. Preconceived notions, political positions, evident biases, extreme positions rooted in the politics of the day does not solve anything. Keeping the health of the markets and the crucial role of the regulators in mind, this is the time for intense discussions by the finance ministry, the regulators, leader of industry and the financial world at large. At stake is a much larger vision of integrity, institution building and best practices.

The Second Opinion is committed to the best practices in industry, trade and services across India and the world. The best opinions are the one with the highest level of objectivity and the best experts are those who have dedication and a spirit of enlightened disinterest (in the sense of absence of bias or prejudice)

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