Adani-Hindenburg Case: According to the application, the primary focus of the PIL was on what steps should be made in the future to strengthen the regulatory system.
The Securities and Exchange Board of India (SEBI) has been accused of violating the timeline for completing the investigation and submitting its report on the allegations of stock price manipulation by the Adani group, according to a petition filed in the Supreme Court. PIL petitioner Vishal Tiwari has filed an application alleging that, notwithstanding the time set by the court, the SEBI has failed to comply with the court’s directive and has not produced the final conclusion/report as directed.
According to the statement, the Supreme Court asked SEBI to submit its report by August 14, 2023, in an order dated May 17, 2023. It stated that on August 25, 2023, SEBI filed a status report on its probe, noting that it had conducted 24 investigations, 22 of which had reached finality and two were of an interim nature. The appeal also cited the most recent report by the Organised Crime and Corruption Reporting Project (OCCRP) on the Adani Group and its alleged investments through “opaque” Mauritius funds.
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According to the application, the primary focus of the PIL was on what steps should be taken in the future to strengthen the regulatory framework so that investors are safeguarded and their investments in the stock market are safe. “Because thousands of crores of investors’ money were lost following the publication of the Hindenburg report against the Adani Group.”
“But now the question arises: whether the present regulatory authority is efficient enough or if some changes are required by setting up a new regulatory body with a more efficient mechanism so that in the future such damaging incidents may not occur in the share market and the investors’ money may be protected,” the report said.
Tiwari stated in his application that a strong mechanism is also essential to keep vigil on the companies’ conduct and practices if they are complying with the regulatory authority’s requisite laws and regulations. “To date, after the recommendations and suggestions given by the expert committee in its report, the Union Government has not taken any strong steps in compliance with them and has not apprised the court of any secured framework for the protection of investors in the future,” the statement said.
Tiwari stated that SEBI has opposed the notion of a necessary deadline for the conclusion of the probe in its plea. “The SEBI objection is contrary to the current need for a strong and efficient regulatory mechanism because time-consuming investigations lead to the disappearance of evidence and vital information against any entity under investigation, and it also reduces investor confidence in the market,” it said, adding that SEBI failed to file its report despite the court’s deadline of August 14.
“The excessive delay in investigation has an impact on the investigation, as well as raising investor suspicion and discouraging them from investing in the future.” Delays in the investigation also result in the manipulation and destruction of crucial material and evidence,” the report stated.
According to the application, the expert committee appointed by this court is still working on the case and has not been released. “As the issue has again been raised by the new disclosures and report of the Organized Crime and Corruption Reporting Project (OCCRP) against Adani Group, the need has arisen to get it investigated by the independent body that was constituted by this court,” the petition stated.
It stated that SEBI should provide an explanation for failing to meet the deadline set by this court in its judgment dated May 17, 2023, for completing the inquiry and delivering a report. On November 6, the Supreme Court stated that the registry would investigate the issue of listing PILs related to claims of stock price manipulation by the Adani group for hearing.
On July 11, the Supreme Court inquired about SEBI’s continuing inquiry into claims of stock price manipulation by the Adani group. The court, which granted the SEBI an extension until August 14, stated that the investigation must be completed as soon as possible. Later, the financial markets regulator filed an update on the Adani-Hindenburg investigation, stating that it was seeking information from tax havens.
According to the SEBI report, it has concluded the investigation into all but two claims against the Adani group and is still awaiting evidence from five tax havens on the actual owners behind foreign investors investing in the company. According to the study, the findings in up to 22 of the 24 instances investigated are definitive. Without disclosing the results of its investigations, the SEBI provided a detailed summary of the processes it took during its examination, including related party transactions.
“SEBI shall take appropriate action based on the outcome of the investigations in accordance with the law,” said the agency. The finalized investigative reports contain charges of stock price manipulation, failure to declare transactions with related parties, and suspected violations of insider trading in some of the group’s equities.
The Supreme Court ordered SEBI until August 14 to conduct its investigation into claims of stock price manipulation by the Adani group on May 17. In a preliminary assessment issued in May, a Supreme Court-appointed expert committee stated that there was “no evident pattern of manipulation” in billionaire Gautam Adani’s firms and that there was no regulatory failure. It did, however, identify many revisions made by the SEBI between 2014 and 2019 that limited the regulator’s authority to investigate, and its investigation into alleged irregularities in money flows from offshore organizations “drew a blank.”
On May 17, the Supreme Court instructed that copies of the report presented to it by the top court-appointed Justice (retd) A M Sapre expert committee be made accessible to the parties in order for them to help it in further discussions in the matter. Adani Group shares had been hammered on the bourses after Hindenburg Research leveled a slew of claims against the corporate behemoth, including allegations of fraudulent transactions and share-price manipulation. The Adani Group denied the allegations, claiming that it complies with all regulations and disclosure obligations.
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