In a recent turn of events in the ongoing Adani-Hindenburg controversy, a plea has been filed in the Supreme Court, seeking contempt proceedings against the Securities and Exchange Board of India (SEBI) for its alleged failure to adhere to the court-mandated timeline in investigating the Adani Group’s alleged stock price manipulation.
The application, lodged by Advocate Vishal Tiwari, a PIL petitioner, underscores SEBI’s non-compliance with the Supreme Court’s order dated May 17, 2023, which directed the regulatory body to submit its investigation report by August 14, 2023. Despite this directive, SEBI has yet to present its final conclusions, prompting Tiwari to seek an explanation for this delay and to initiate contempt proceedings against SEBI.
Tiwari’s application draws attention to the significant investor losses following the publication of the Hindenburg report against the Adani Group. He expresses concern over the current regulatory framework’s effectiveness, questioning 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 future such damaging incidents may not occur in the share market and the investors’ money may be protected.”
The plea also references a recent report by the Organised Crime and Corruption Reporting Project (OCCRP) against the Adani Group, further intensifying the need for a comprehensive investigation. Tiwari argues for a stronger mechanism to monitor companies’ compliance with regulations, stating,
“That till now after the recommendations and suggestions given by the expert committee in its report the Union Government has not taken any strong step in compliance of that and has not apprised the court with any secured framework for the protection of investors in future.”
Also read- Adani Group Stocks Dip As Supreme Court Delays Adani-Hindenburg Case Hearing (lawchakra.in)
SEBI, in its status report filed on August 25, 2023, revealed that it had conducted 24 investigations, with 22 reaching finality and two being of an interim nature. The regulator, however, has faced criticism for its objection to a necessary timeline for completing the investigation. Tiwari argues,
“The SEBI objection is contrary to the present need of a strong and efficient regulatory mechanism because timeless investigations lead to the disappearance of evidence and vital information against any entity which is under investigation and it also reduces the confidence of the investors in the market.”
The Supreme Court, on November 6, noted that the apex court registry would look into the issue of listing for hearing PILs related to allegations of stock price manipulation by the Adani group. This followed a request for urgent listing by Advocate Prashant Bhushan on behalf of the petitioners.
The Adani Group has consistently denied the allegations made by Hindenburg Research, asserting its adherence to all laws and disclosure requirements. Meanwhile, the Supreme Court-appointed expert committee, led by Justice (retd) A M Sapre, in its interim report, found no evident pattern of manipulation in the Adani Group’s activities. The committee also highlighted several amendments made by SEBI that constrained its investigative capabilities.
As the case awaits further proceedings, the financial world watches closely, with the outcome set to have significant implications for regulatory practices and investor protection in India’s stock market.
