Solicitor General Tushar Mehta clarifies in Supreme Court SEBI’s 2016 GDR probe had nothing to do with listed Adani cos

• Social media links SEBI’s 2016 GDR order against 51 companies to regulator's probe into Hindenburg allegations.
• Solicitor General says deliberate attempts are being made to link two unrelated issues.
• SEBI has submitted a status report to the Supreme Court on its investigation into the minimum public shareholding norms in Adani group companies.

It is a well known fact that social media can wreak havoc on individuals and companies alike, but the influence of these platforms is underlined further when the country’s Solicitor General has to answer questions raised on social media at the apex court. Since last week, there has been abundant chatter on social media on whether or not the markets regulator has been investigating the Adani group or not. India’s Solicitor General, Tushar Mehta, on behalf of the the Securities and Exchange Board of India (SEBI), on Wednesday clarified a number of facts around the markets regulator’s probe against the Adani group.

In his submission to the Supreme Court, he said: “In order to bring abundant clarity to the issues raised in the social media comments, the following is submitted...” He explained that there was an erroneous linkage being made between SEBI’s 2016 GDR probe and the Adani group. Tushar Mehta has reiterated in the SC today, that the 2016 GDR matter was totally different, distinct, and completely separate from the 19th July 2021 reply by Minister of State for Finance to the Parliament, wherein he had said that SEBI was investigating some Adani group companies with regards to the minimum public shareholding norms.

The SG’s submission gives an explanation on what SEBI is investigating and what it is not. In 2016, SEBI passed an order against 51 listed entities with regards to Global Depository Receipts. The submission made to the Supreme Court on Wednesday states: “No listed company of the Adani Group was part of the aforesaid list of 51 companies, which has been specifically stated in our rejoinder dated 15 May 2023 to the Honorable Supreme Court. However, there were some FPIs including Cresta Fund Limited, Albula Fund Limited and APMS Fund Limited, the relevant GDR accounts of which were frozen as a consequence of the 2016 order.” It has no relation and/or connection to the issues referred to and/or arising out of the Hindenburg Report but there are attempts to connect these two.

In the matter pertaining to the minimum public shareholding norms, markets regulator has approached 11 overseas regulators under the Multilateral Memorandum of Understanding (“MMOU”) with the International Organization of Securities Commissions. SEBI has said that it has sought information from several global regulators under its MMOU. The first request to overseas regulators was made as early as 6 October 2020. Till date, there is no conclusion of any alleged wrong-doing in this matter as it is still under investigation.

SEBI has informed the Supreme Court of India that it was investigating allegations made by Hindenburg Research in its report on Adani group. One of the allegations made by the research firm was non-compliance with minimum public shareholding norms. The regulator’s status report on the same has been submitted to the six-member expert committee appointed by the apex court.