SEBI Requests 6-Month Extension To Complete Hindenburg's Adani Probe from Supreme Court

The Indian regulator, the Securities and Exchange Board of India (SEBI), is seeking a six-month extension from the Supreme Court to complete its inquiry into the allegations made by Hindenburg Research against the conglomerate of billionaire Gautam Adani.

According to reports, the SEBI was supposed to submit a status report to the Supreme Court by May 2, but it has not responded to requests for comment.

In January, Hindenburg Research, a New York-based short-seller, claimed that Adani Group had used a complex network of firms in tax havens to artificially inflate its revenues and stock prices, while also accumulating a substantial amount of debt. The Adani Group has consistently denied these accusations.

SEBI has submitted an application which highlights some of the preliminary discoveries regarding the Adani Group. These findings include potential breaches such as inaccurate financial information, deceitful transactions, non-compliance with disclosure norms, corporate governance norms, minimum public shareholding standards, and stock price manipulation.

It also revealed trading activities in Adani stocks before and after the release of the Hindenburg report. As a result, SEBI has formed a preliminary viewpoint, which involves potential violations of foreign portfolio investment (FPI) norms, overseas direct investment (ODI) norms, insider trading regulations, and short selling standards.

The Supreme Court had ordered SEBI to look into the Adani Group on March 2, alleging potential violations of securities contract laws, a failure to follow disclosure guidelines, and stock price manipulation.

The fact that SEBI requested an extension shows that the investigation is complicated and needs more time to ensure that all relevant components of the charges are thoroughly investigated. The regulator has asked seven listed companies-Adani Enterprises, Adani Power, Adani Transmission, Adani Green Energy, Adani Ports and SEZ, Adani Total Gas, and Adani Wilmar-as well as their subsidiaries and other parties involved in the transactions, for information and documentation.

SEBI has requested a variety of documents from companies, including financial statements dating back 12 years for those listed before 2009-10, minutes and agendas from board and audit meetings, information on loans received and disbursed, reasons for loans, details of assets, liabilities, and receivables, and information on shareholding and the promoters/directors. They have also requested information on the purpose of issuing debentures, among other things.

Normally, SEBI would take around 15 months to complete such a complex investigation. However, they are making all efforts to finish the probe within six months. The investigation will involve depositions from Key Managerial Personnel and auditors.