Sebi asks Supreme Court for 15 more days to submit its report on Adani Group

• Sebi was supposed to submit its report on Adani Group today. Regulator has sought 15 days more as it is awaiting information from global agencies.
• Sebi was tasked with investigating the allegations made by Hindenburg Research against Adani Group.
• The Supreme Court appointed 6-member panel has found no wrongdoing by the Adani Group.
  

Markets regulator Securities and Exchange Board of India has sought more time to submit its report to the Supreme Court with its findings on the Adani Group and allegations made by short seller Hindenburg Research. Sebi was supposed to submit its report today (Aug 14, 2023).

In its submission to the Supreme Court, the market regulator has said: “Applicant/Sebi most respectfully submits that it has progressed substantially and keeping in view the ongoing work, which are set out and explained in para 3 herein above it would be just, expedient and in the interest of justice that this Hon’ble Court may be pleased to grant to the Applicant/Sebi, an extension of time by 15 days in order to conclude the process and file status report with respect to the thereto, before this Hon’ble Court.”

This is the second extension that the markets regulator has sought from the apex court. Sebi is awaiting information it has sought from foreign entities, regulators and agencies. Once the regulator has the relevant information it will decide the next course of action, if any, it merits.

The Supreme Court had appointed a six member committee to look into the allegations made by Hindenburg Research. The markets regulator was also supposed to submit its own report into the same after it had completed the investigation. On 12 May, the Supreme Court had granted a three month extension to Sebi to complete its investigation into allegations made by Hindenburg Research on Adani Group. The allegations pertained to the minimum shareholding of the group and related party transactions.

The six-member committee appointed by the Supreme Court in May had said in its report that it had not found evidence of the Adani Group violating existing market regulations. However, the Securities and Exchange Board of India (Sebi) wants time to further investigate charges made in the Hindenburg report. The ball is now firmly in Sebi’s court as it has sought more time to investigate possible violations of norms pertaining to minimum public shareholding and related party transactions.

The SC committee’s report said: “Sebi is seeking more time to effect more investigations. This is (a) matter between Sebi and the Hon’ble Supreme Court.” The committee has called for a coherent enforcement policy, after Sebi appeared to be going beyond the remit of its own regulations.

The committee was tasked with investigating whether there was any violation that the Adani Group had committed. The Justice AM Sapre led committee had submitted its report on May 8 to the apex court in a sealed envelope. The three key areas the SC appointed committee was looking into were: 1) Violation of Minimum Public Shareholding norms, 2) Disclosure of transactions with related parties in accordance with the law and 3) Stock price manipulation. The report says that prima facie there is no violation of existing laws or market regulations.

The biggest allegation against the Adani Group has been that it has violated minimum public shareholding norms because of 13 entities that have been under investigations since 2020 that own substantial stakes in listed Adani companies. A violation of MPS norms would have been proven if the ultimate beneficiary of these 13 foreign portfolio investors (FPIs) could be in any way traced back to the promoters of Adani Group.

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