In a significant development, the Securities and Exchange Board of India (SEBI) has applied to the Supreme Court for a 15-day extension to submit its report on the Adani-Hindenburg case. The regulatory body has cited “substantial progress” in its investigation, outlining its achievements and future course of action in the ongoing case.
Advancements in the Investigation
SEBI‘s filing highlights its progress in the investigation, including the completion of inquiries into 17 out of 24 transactions related to the Adani case. The remaining seven cases are also undergoing meticulous examination, with four cases at the stage of crystallization and two others at an advanced investigation phase. An interim report is being prepared for the remaining matter.
The probe aims to address critical concerns, such as whether the Adani Group exploited loopholes in the minimum public shareholding (MPS) norms to manipulate share prices and whether related-party transactions were appropriately disclosed.
Challenges and Outcomes
The regulatory body is notably investigating whether the Adani Group benefited from manipulating the share prices of its group companies. The use of certain strategies to exploit MPS norms is under scrutiny, alongside an evaluation of the disclosure of related-party transactions. This investigation was prompted by the Hindenburg report.
Notably, entities involved in the case allegedly took short positions before the Hindenburg report’s publication and profited from the subsequent price crash. During the period between January 24 and February 27, the market capitalization of Adani stocks suffered a significant decline of around Rs 12.4 lakh crore, further dropping to Rs 10 lakh crore by March 9.
Supreme Court Involvement
The Supreme Court had initially set a deadline of August 14 for SEBI to conclude its investigation and submit a report. The case is scheduled for a hearing on August 29. This legal proceeding emerged following PILs filed post the Hindenburg report. To examine potential regulatory lapses, the apex court formed a committee led by former Supreme Court judge Justice AM Sapre.
Regulatory Oversight and Challenges
The committee’s report, submitted in May, indicated that SEBI’s explanations and empirical data did not conclusively suggest regulatory failure regarding the allegations of price manipulation. However, it also revealed certain gaps in SEBI’s probe, such as inquiries into foreign institutional ownership in Adani Group entities and concerns over public shareholders potentially serving as fronts for company promoters.
In light of these ongoing investigations and regulatory actions, all 10 Adani stocks experienced declines, with Adani Enterprises and Ambuja Cements facing reductions of over 3% each.
The Adani-Hindenburg case remains a focal point in India’s financial landscape. SEBI’s proactive approach to investigating alleged irregularities highlights its commitment to maintaining market integrity and safeguarding investor interests. The Supreme Court’s role in overseeing this process underscores the importance of regulatory oversight in maintaining transparency and fairness in the markets.
Disclaimer: The information provided here is for educational purposes only and should not be considered financial advice. Always conduct thorough research and consider consulting a legal or financial professional for guidance on specific cases.