Adani-Hindenburg issue: 22 investigations are final in nature

NEW DELHI: The Securities and Exchange Board of India (SEBI) has filed a fresh status report before the Supreme Court apprising it that out of 24 investigations arising out of the Hindenburg report, 22 are final in nature and 2 are interim in nature.

SEBI submitted that with respect to the interim investigation reports SEBI has sought information from external agencies and entities and upon receipt of such information will evaluate the same vis-a-vis the interim investigation report to determine further course of action, if any, in the matters.

SEBI submitted that it shall take appropriate action based on the outcome of the investigations in accordance with law in various aspects. The investigation was carried out in compliance with the directions of the top court's order dated March 2, 2023, SEBI has investigated 24 matters.

SEBI has conducted its probe in the matter relating to the violation of rule 19A of the Securities Contracts (Regulation) Rules, 1957 (Minimum Public Shareholding) and alleged non-compliance with minimum public shareholding ("MPS") requirements specified in rule 19A of the Securities Contracts (Regulation) Rules, 1957 (SCRR).

Scope of investigation (s): To ascertain alleged non-compliance with minimum public shareholding ("MPS") requirements specified in rule 19A of the Securities Contracts (Regulation) Rules, 1957 (SCRR). Apart from that, SEBI has examined possible violation of SEBI (Foreign Portfolio Investors) Regulations, 2014 ("FPI Regulations, 2014") and SEBI (Foreign Portfolio Investors) Regulations, 2019 ("FPI Regulations, 2019"), SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011("SAST Regulations"), SEBI (Prohibition of Insider Trading) Regulations, 2015 (Insider Trading Regulations") and examination of all the trades in Adani Group of companies pre and post-release of Hindenburg Report.

Earlier Securities and Exchange Board of India (SEBI) has filed an application before the Supreme Court seeking 15 more days to conclude the investigation and submit the status report into its probe into the Hindenburg report.

In the mid of May, the top court gave three months more time to the Securities and Exchange Board of India (SEBI) to conduct a probe into the Hindenburg report SEBI was granted time till 14 August 2023 to conduct the probe.

On March 2, the apex court directed the capital market regulator SEBI to investigate any violations of securities law by the Adani Group in the wake of the Hindenburg report, which led to a massive wipeout of more than USD140 billion of the Adani Group's market value. Supreme Court, on March 2, set up an expert committee on the issue arising from the Hindenburg Research report on Adani Group companies.

The committee will consist of six members, headed by former apex court judge Justice AM Sapre.

The top court had then asked SEBI to file a status report within two months. The apex court was then hearing petitions pertaining to the Hindenburg report, including the constitution of a committee relating to regulatory mechanisms to protect investors' interests.

The January 24 Hindenburg report alleged stock manipulation and fraud by the conglomerate. The Adani Group has attacked Hindenburg as "an unethical short seller", stating that the report by the New York-based entity was "nothing but a lie".

A short-seller in the securities market books gains from the subsequent reduction in the prices of shares.