Adani-Hindenburg case is making waves in the markets, raising questions about regulatory oversight for one of India’s largest conglomerates. Corporate governance and investor confidence are now in focus as SEBI takes consequential actions.
Thank you for reading this post, don't forget to subscribe!
The Supreme Court of India has once again found itself at the center of the high-profile Adani-Hindenburg case. This case has not only stirred the stock markets but also raised questions about the regulatory oversight of one of India’s largest conglomerates. The Supreme Court’s stance and the subsequent actions taken by the Securities and Exchange Board of India (SEBI) have significant implications for corporate governance and investor confidence in the country.
The controversy began when Hindenburg Research, a notable entity in financial analysis, accused the Adani Group of engaging in “brazen stock manipulation” and running an “accounting fraud scheme,” going as far as to label it “the largest con in corporate history.” The Adani Group has clearly said they didn’t do what the Hindenburg report claimed. They stand firm in denying those accusations.
In response to these allegations, a review petition was filed, challenging the Supreme Court’s endorsement of SEBI’s investigation into the matter. The petition highlighted alleged errors and oversight in SEBI’s regulatory approach. However, the Supreme Court, led by Chief Justice of India DY Chandrachud, had previously dismissed requests for the creation of a special investigation team (SIT) or for transferring the probe to the Central Bureau of Investigation (CBI), showcasing the court’s confidence in SEBI’s ability to manage the situation effectively.
The Supreme Court’s judgment emphasized that the Government of India and SEBI are tasked with determining any legal violations in the Hindenburg report concerning short selling and, if found, to take appropriate action in accordance with the law.
Chief Justice DY Chandrachud noted-
“Sebi has completed investigation in 20 out of 22 matters. Taking into account the assurance of the Solicitor General, we direct the Sebi to complete the investigation in the other two cases within three months.”
This directive came after the Supreme Court, in March 2023, instructed SEBI to scrutinize any breaches of securities law by the Adani Group following the Hindenburg report. Additionally, an expert committee led by retired Justice AM Sapre was established to delve into the matter. The committee’s findings, released in May, indicated no prima facie lapses by SEBI in handling the allegations.
ALSO READ: Supreme Court to Review if Divorced Muslim Women Can Seek Maintenance under Section 125 CrPC
Despite the gravity of the accusations by Hindenburg Research, the interim report presented by the expert committee appointed by the Supreme Court found no tangible evidence of manipulation in the companies owned by billionaire Gautam Adani. Moreover, the report concluded that there were no identified regulatory failures, reinforcing the integrity of the regulatory framework in place.
SEBI’s recent update shows that 22 out of 24 investigations prompted by the Hindenburg report are finished. The remaining two are pending as SEBI awaits information from tax havens, specifically details about the true owners of foreign investors in the conglomerate.
