Adani Group issues statement as SEBI approaches SC for more time in investigation into foreign short-seller allegations

Ahmedabad (Gujarat) [India], April 29 (ANI): The Securities and Exchange Board of India (SEBI) is conducting an investigation into allegations made by a foreign short-seller on 25 January 2023 and also into market activity before and after that date, a statement from the spokesperson of the Adani Group said.

“We understand that SEBI has approached the Hon’ble Supreme Court for more time to conclude its investigation,” the statement further said.
“We have welcomed the investigation, which represents a fair opportunity for everyone to be heard and for all issues to be addressed. We are fully compliant with all laws, rules and regulations and are confident that truth will prevail. We are fully cooperating with SEBI and will continue to provide all our support and cooperation,” the statement added.

It is pertinent to note that in the SEBI application filed before the Hon’ble Supreme Court, there are no conclusions of any alleged wrong-doing. The SEBI application only cites the allegations made in the short-sellers report, which are still under investigation, the statement said.

“While we continue to remain focused on our business and growth, we would request the media to avoid needless speculation at this time and wait for SEBI and the Expert Committee appointed by the Hon’ble Supreme Court to complete their work and submit their findings,” the statement said.

SEBI has urged the Supreme Court to extend the time to conclude the investigation in the Hindenburg Research report on the Adani Group by a period of six months.

In an application moved before the Supreme Court, SEBI submitted that it would take further time to arrive at verified findings and conclude the investigation.

SEBI, in the application also submitted that for ascertaining possible violations related to misrepresentation of financials, circumvention of Regulations and/or fraudulent nature of transactions in respect, SEBI in the normal course would take at least 15 months for completion of the investigation of these transactions, but is making all reasonable endeavours to conclude the same within six months.

“Applicant/SEBI, in the forgoing circumstances, most respectfully submits that in order to enable SEBI to conduct a proper investigation and arrive at verified findings, it would be just, expedient and in the interest of justice that this Court may be pleased to extend the time to conclude the investigations as directed in the common order dated 02.03.2023, by at least 6 months,” SEBI said.

Supreme Court on March 2 set up an expert committee on the issue arising from the Hindenburg Research report on Adani Group companies. The committee will consist of six members, headed by former apex court judge Justice AM Sapre. The top court had then asked SEBI to file a status report within two months.

The Expert Committee is headed by Justice Abhay Manohar Sapre, a former judge of the Supreme Court of India along with other five members who include retired judge Justice J P Devadhar, OP Bhatt, KV Kamath, Nandan Nilekani and Somashekhar Sundaresan.

In addition to this, SC had directed SEBI to investigate whether there has been a violation of Section 19 of SEBI rules, whether there was any manipulation of stock prices.

The apex court was then hearing petitions pertaining to the Hindenburg report, including on the constitution of a committee relating to regulatory mechanisms to protect the investors’ interest.

SEBI apprised the top court that it has shared information as sought by the committee formed by the top court. SEBI submitted that the detailed investigation process would also include depositions as may be required from various entities such as Key Managerial Personnel (KMPs), statutory auditors and other relevant persons.

The court had said that as a part of its ongoing investigation, SEBI shall also investigate the other aspects of the issues raised in the present batch of petitions which include whether there has been a violation of Rule 19A of the Securities Contracts (Regulation) Rules 1957.

There was a loss of investors wealth in the securities market after the Hindenburg report because of a steep decline in the share price of the Adani Group of companies.

The January 24 Hindenburg report alleged stock manipulation and fraud by the conglomerate.

The Adani Group has attacked Hindenburg as “an unethical short seller” and stated that the report by the New York-based entity was “nothing but a lie”. A short seller in the securities market books gain from the subsequent reduction in prices of shares, it said.