SEBI Gets Extension for Adani Probe
SEBI Receives Extension from Supreme Court to Probe Adani Group Allegations
The Securities and Exchange Board of India (Sebi) was given an extension by the Supreme Court on Wednesday until August 14 in order to complete its inquiry into claims made against the Adani group by US short-seller Hindenburg Research. The extension does not, however, go for the full six months that the market regulator requested.
The court further ordered Sebi to provide a particular report on its inquiry into claims that some Adani entities violated minimum public shareholding (MPS) standards. A publicly listed firm is required by Sebi regulations to have a minimum public ownership of 25%. According to an affidavit provided by Sebi on Monday, it initially contacted foreign authorities on October 6, 2020, as part of the probe into MPS of several Adani firms. However, the affidavit did not inform the supreme court of the status or conclusion of this probe.
SEBI’s Investigation into Adani Group Claims: Supreme Court Grants Time Extension
Sebi agreed to provide the most recent information regarding the investigation into the MPS norms case while pointing out that the junior finance minister’s statement to Parliament in July 2021 that “Sebi is investigating some Adani group companies about compliance with Sebi regulations” only applied to the MPS norms and had nothing to do with the Hindenburg report, as per the latest business news headlines.
The top court stated that it would first evaluate the investigation completed as of August 14 before determining whether additional time should be granted, despite Sebi’s request for at least another six months to finish its investigation into Hindenburg’s allegations of stock price manipulation and accounting fraud by the Gautam Adani-led group.
In regards to Sebi’s investigation into the MPS norms case, the bench took into account arguments made by attorney Prashant Bhushan that it is one of the components of the ongoing investigation into the allegations against the Adani group, and it instructed the regulator to document the advancement in this area as well.
The January 24 report from Hindenburg alleged “brazen accounting fraud” and “stock manipulation” by the Gautam Adani-led organisation. Despite the conglomerate’s rejection of the story as “unresearched” and “maliciously mischievous,” it caused a large sell-off of Adani group equities, which lost over USD 140 billion in days and necessitated the cancellation of a share sale of Rs. 20,000 crores in the firm’s flagship, making this the biggest business news today.
Extending Investigative Horizons
The Securities and Exchange Board of India (SEBI) received an extension from the Supreme Court on Wednesday, allowing it until August 14 to delve into allegations against the Adani Group. However, the extension falls short of the full six months initially requested by the market regulator.
Focus on Minimum Public Shareholding
In a significant move, the court directed SEBI to furnish a specific report on its investigation into allegations of certain Adani entities violating minimum public shareholding (MPS) norms. Under SEBI regulations, publicly listed firms are mandated to maintain a minimum public ownership of 25%. SEBI’s affidavit, submitted on Monday, revealed its outreach to foreign authorities since October 6, 2020, as part of the probe into MPS compliance of various Adani firms. However, the affidavit remained silent on the probe’s status or conclusion, prompting the court’s scrutiny.
SEBI’s Investigative Progress
SEBI committed to providing updated information on the investigation into MPS norms, clarifying that the minister’s statement to Parliament in July 2021 pertained solely to MPS compliance and not the allegations raised by Hindenburg Research. Despite SEBI’s request for a six-month extension to probe Hindenburg’s claims of stock price manipulation and accounting fraud, the court reserved its decision, indicating a preference to assess progress made by August 14.
Integration of Investigative Threads
Attorney Prashant Bhushan’s arguments underscored the interconnectedness of SEBI’s investigations, with MPS norms being just one facet of the broader probe into Adani Group allegations. The court, in response, mandated SEBI to document advancements in this area, recognizing its significance in the overarching investigation.
Allegations and Market Response
Hindenburg Research’s January 24 report alleging “brazen accounting fraud” and “stock manipulation” by the Gautam Adani-led conglomerate sent shockwaves through the market. Despite vehement denials from the Adani Group, the report triggered a significant sell-off, resulting in a loss of over USD 140 billion in market value and the cancellation of a Rs. 20,000 crore share sale, making it a watershed moment in recent business history.
Continued Scrutiny and Transparency
As SEBI’s investigation unfolds, the spotlight remains firmly on regulatory diligence and transparency. The Supreme Court’s directive underscores the imperative of thorough investigative procedures and timely reporting. By adhering to these principles, SEBI aims to uphold market integrity and investor confidence, navigating complex terrain with steadfast determination.
In conclusion, SEBI’s extension to probe allegations against the Adani Group underscores the gravity of the situation and the regulator’s commitment to thorough investigation. As the inquiry progresses, stakeholders await with bated breath, anticipating insights that could reshape the trajectory of India’s financial landscape.