What SC Told SEBI During Adani Group-Hindenburg Report Hearing?

Supreme Court (SC) has asked the Securities and Exchange Board of India(SEBI) to probe further into the allegations of Adani stock manipulation. On Friday, the SC granted SEBI an extension of 3 months to investigate, but SEBI seeks a 6-month extension.

The matter is now listed for Monday, May 15 hearing for considering SEBI's plea seeking an extension of time as per The Economics Times report. The bench consisting of Chief Justices DY Chandrachud, Justices PS Narasimha, and JB Pardiwala said the court registry received the report of the apex court-appointed Justice (retd) AM Sapre committee on the issue and would like to hear the matter on Monday after perusing the findings of the panel.The bench said, "We will go through the report in the meantime. We will take up the matter on May 15".

The bench solicitor representing SEBI said that the SC may grant 3 months instead of 6 months as it wants to wrap up the probe into allegations of stock manipulation. Further, a lawyer of a petitioner, mentioned that the SC has not said anything about any regulatory failure on the part of SEBI.

"Be careful when you make allegations. This may affect the sentiments in the stock market. It's all your allegations and the panel has been formed to look into it," the bench said.

Earlier on March 2, the apex court had on March 2 asked SEBI to probe within 2 months since manipulation allegations made the news. The court had also set up a panel to look at protecting Indian investors after a damning report by US short-seller Hindenburg wiped out more than $140 billion of the Indian conglomerate's market value.

In an application moved before the court, SEBI had earlier submitted it needs 6 more months for ascertaining possible violations related to "misrepresentation of financials, circumvention of regulations and/or fraudulent nature of transactions".

"Pass an order extending the time to conclude the investigation as directed by this Court by the common order dated March 2 by a period of 6 months or such other period as this court may deem fit and necessary in the facts and circumstances of the present case," the SEBI plea said.

Even on February 10, the top court had asked the Centre to consider setting up a panel of domain experts headed by a former judge to look at strengthening the regulatory mechanism. The apex court had stressed protecting the investors' interest against the market volatility in the backdrop of the rout of the Adani Group stocks at that time as well. The Centre agreed with the proposal of setting up a panel.

Before that on January 24, the US-based Hindenburg research report had shared a detailed account of Adani-family controlled offshore shell entities in tax havens. The financials were circumvented through the Caribbean, Mauritius, and the United Arab. The research report alleged such transaction has facilitated corruption, money laundering, stock price manipulation, and taxpayer theft.

However, the Adani Group has repeatedly refuted these claims, the ensuing market selldown has wiped $100 billion off the market value of its listed entities.

One area highlighted by Hindenburg that has received attention is that Gautam Adani's little-known elder brother, Vinod Adani, is a director of several overseas firms which are either investor in or transact with Adani's empire. The US short-seller characterized this as "a vast labyrinth of offshore shell entities" that moved billions of dollars into Adani firms without disclosure "of the related party nature of the deals."