For much of the past decade, the Securities and Exchange Board of India (Sebi) has positioned itself as a more assertive regulator—tightening disclosure norms, accelerating settlement cycles and stepping up enforcement against market misconduct. Yet, even as governance standards for listed companies and intermediaries rose, questions about conflict of interest at the very top of the regulator quietly gathered force.
Those questions came into sharper focus during the tenure of Madhabi Puri Buch, first as a whole-time member and later as Sebi chairperson. What initially appeared to be a debate around individual disclosures has since evolved into a broader institutional concern: Should Sebi’s senior-most officials be subject to clearer, more transparent conflict-of-interest rules—similar to those applied to the entities they regulate?
What triggered the controversy
At the core of the debate lies an asymmetry. While Sebi’s employees operate under strict service rules—limits on investments, mandatory disclosures and trading restrictions—the chairman and whole-time members have historically been governed by a lighter, largely confidential disclosure framework.
During and after Buch’s tenure, allegations surfaced in the public domain—most prominently through an international short-seller’s report—raising questions about potential overlaps between personal financial interests of senior officials and areas under regulatory scrutiny. These included offshore investments, past business interests, and advisory or consulting roles linked to close family members.
Scrutiny also extended to the professional engagements of Dhaval Buch, Madhabi Puri Buch’s husband, whose consulting and advisory work with global firms led critics to argue that—even if disclosed—such relationships highlighted the limits of Sebi’s existing framework in addressing indirect or relational conflicts of interest.
Buch has denied any wrongdoing, stating that all disclosures were made in line with prevailing rules and that there was no regulatory impropriety. But the controversy underscored a larger issue: Sebi’s conflict-of-interest rules for its top leadership were opaque, discretionary and largely shielded from independent oversight.
An internal debate at the regulator
That gap moved to the centre of policy discussion in late 2025, when a Sebi-appointed high-level committee recommended a significant overhaul of the regulator’s conflict-of-interest framework.
Its proposals included public disclosure of assets and liabilities by senior officials, standardised definitions of conflict, uniform investment restrictions, mandatory recusals, a post-retirement cooling-off period, and the creation of an independent Office of Ethics and Compliance.
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However, when the recommendations reached Sebi’s board, agreement proved elusive. As reported by The Economic Times, differences emerged over whether Sebi could unilaterally impose binding conduct rules on officials whose appointments are approved by the central government. Some members flagged legal and constitutional concerns, while others raised privacy issues related to public asset disclosures.
As a result, implementation of the recommendations has been deferred—leaving Sebi with an unresolved governance question.
Why perception matters
For regulators, conflict of interest is not only about proven misconduct. It is also about perception.
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Sebi’s authority depends on public and investor confidence that regulatory decisions are taken without personal considerations, however indirect. Even the appearance of conflicted incentives can weaken credibility, particularly as Indian markets attract greater global capital and scrutiny.
This has inevitably drawn comparisons with international peers.
How the US SEC handles conflicts
The US Securities and Exchange Commission (SEC) operates under a far more prescriptive ethics regime. Commissioners and senior officials are required to file public financial disclosure statements detailing assets, income, liabilities and outside positions under federal ethics laws.
Beyond disclosure, US rules restrict ownership or trading of securities linked to regulatory oversight, limit outside employment and mandate recusals where personal or familial financial interests exist. The SEC also maintains a dedicated Office of Ethics Counsel to advise officials, monitor compliance and address potential conflicts before they escalate.
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The emphasis is as much on preventing ethical ambiguity as on enforcing penalties.
What’s at stake for Sebi
The debate is less about any one individual and more about institutional design. As India’s capital markets scale up—drawing new retail investors, complex products and global funds—the regulator’s own governance standards are under sharper focus.
Notably, after Buch’s tenure, the government appointed Tuhin Kanta Pandey, a career IAS officer, as Sebi chairman—a choice seen by some as reflecting a preference for bureaucrats who are already bound by government personnel and conduct rules.
Whether Sebi ultimately adopts a more disclosure-heavy global model or crafts an India-specific approach, the direction of travel is clear: In the next phase of market regulation, how watchdogs govern themselves will matter as much as how they regulate others.
After studying law I vectored towards journalism by accident and it's the only job I've done since. It's a job that has taken me on a private jet to Jaisalmer - where I wrote India's first feature on
