The head of India's market regulator said on Friday she had complied with all disclosure guidelines issued by the Securities and Exchange Board of India (SEBI), rejecting allegations levelled by the country's main opposition party and a U.S. short seller about a conflict of interest.

"Madhabi has complied with all the disclosure and recusal guidelines of SEBI, and in fact, maintained a proactive continuing recusal list with SEBI over and above the requirements under the guidelines," Madhabi Puri Buch said in what she called a personal statement.

Buch has faced criticism from U.S. short seller Hindenburg Research and India's opposition political parties about alleged conflicts of interest in investigations related to the Adani Group and other corporate entities.

The wrangle is a rare instance of the head of a top Indian regulator facing pressure to resign over alleged wrongdoing.

In a report in August, Hindenburg, a forensic financial research firm, alleged that Buch had previous investments in a fund which was part of a network of funds used by Vinod Adani, brother of billionaire Gautam Adani.

SEBI is currently investigating alleged regulatory violations by the Adani Group, and Hindenburg said Buch's previous investments left her less than objective in steering those investigations.

Buch, in a previous statement, denied this.

Hindenburg's report was followed by a series of allegations by India's opposition Congress Party which is demanding an investigation and Buch's resignation from SEBI, which oversees listed companies and domestic and foreign investors.

"The allegations made are false, incorrect, malicious and motivated," Buch and her husband Dhaval Buch said in the statement.

In particular, Buch said, she has not dealt with any regulatory matters related to her former employer ICICI Bank.

CONSULTING FEES

The Congress party alleged that Buch had a conflict of interest in dealings with ICICI, where she worked until 2011. The bank denied this in a statement.

The Congress said that Buch continued to earn an income from ICICI Bank through employee stock options (ESOPs) when it was being investigated by the regulator for market infractions.

"SEBI's guidelines permit board members, including the Chairperson, to hold and transact in ESOPs," Buch's statement said.

Buch's statement also denied allegations made by the Congress about a conflict of interest with the Mahindra Group and Dr. Reddy's due to consulting fees given by these groups to Dhaval Buch.

Madhabi Buch recused herself from matters related to these companies, the statement said.

The consulting fees were earned through two entities, Agora Partners and Agora Advisory, in which Madhabi Buch owns a 99% shareholding. These advisories had continued to earn revenue after Buch joined the regulator, taking on its second highest post, in 2017, Reuters had reported.

This was done to "transparently isolate" income from companies earned by Dhaval Buch from his personal income and expenses, the statement said. Buch added that all the allegations made against her are based on her income tax returns which have been obtained through 'fraudulent means and illegally'.

The government has so far been silent on the opposition's allegations.

An email sent to the federal Finance Ministry about a query on plans to investigate Buch was not answered immediately.

A Congress party spokesperson told Reuters it would respond shortly to the assertions made in Buch's statement.

(Reporting by Jayshree P. Upadhyay in Mumbai; additional reporting by Shivangi Acharya in New Delhi Editing by Mark Potter, Christina Fincher, William Maclean)