The Supreme Court on Wednesday listed on February 17 a petition filed by Congress party leader Dr. Jaya Thakur seeking investigation against the Adani Group on the basis of a report submitted by U.S.-based short seller firm, Hindenburg Research, accusing it of market manipulation and financial fraud.
Media reports said the group of companies related to Adani lost about $100 billion in market value following the report.
The petition has also sought an investigation into the alleged investment of “huge amounts of public money” by the Life Insurance Corporation and the State Bank of India (SBI) in the FPO of Adani Enterprises at a rate of ₹3,200 per share when the prevailing rate in the secondary market was around ₹1,800 per share.
A Bench led by Chief Justice of India D.Y. Chandrachud agreed to list the petition along with two others already scheduled for hearing on January 17.
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The Centre and the Securities Exchange Board of India (SEBI) had on February 13 said they had no objection to the Supreme Court constituting an expert committee to examine the existing regulatory regime and frameworks in the securities market to protect investors from share value meltdowns like seen in the Adani Group.
Meanwhile, SEBI had said in court that it was already enquiring into the allegations made in the Hindenburg report as well as the market activity immediately preceding and post the publication of the report in order to identify violations of SEBI Regulations, including but not limited to SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003; SEBI (Prohibition of Insider Trading) Regulations, 2015; SEBI (Foreign Portfolio Investors) Regulations, 2019; and Offshore Derivative Instruments (ODI) norms and short selling norms.
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The market regulator has attempted to allay fears by saying that the events concerning the Adani Group, following the Hindenburg report, were “localised to a single group of companies and that there is no significant impact at a market-wide level or at a system-wide level, that might warrant a system level review of the regulatory frameworks in operation”.
However, it had acknowledged that “entity level issues that have arisen have had a significant impact at the entity level and warrant detailed examination by the regulator”.
“While the shares of the Group have seen significant decline in prices on account of selling pressure, the wider Indian market has shown full resilience. The combined weight of the Group companies in Sensex is zero and in Nifty is below 1%,” it noted.
