Adani-Hindenburg Row: SC Asks SEBI-Govt To Create A Framework To Protect Investors

The Supreme Court on Friday stated that Indian investors have suffered losses worth several lakh crores as a result of the drop in share prices of Adani Group companies. A Bench comprising Chief Justice of India DY Chandrachud, Justice PS Narasimha, and Justice JB Pardiwala has asked the Securities and Exchange Board of India (SEBI) to recommend measures to protect Indian investors in the future.

“It is said total loss by Indian investors is several lakh crores. How do we ensure they are protected.. it is said 10 lakh crores. How do we ensure that this does not happen in future. What role should be envisaged for SEBI in future,” the CJI remarked.

Appearing for SEBI, Solicitor General Tushar Mehta stated that the trigger point of the issue happened beyond the jurisdiction of India.

“Today there is seamless capital flow. How do you ensure that investors are protected. Everybody is an investor now, small or big,” the CJI responded.

“It would be premature for me to answer the cause,” the SG continued, “but the trigger point was the report, which was outside the country’s territorial jurisdiction.”

The bench proposed forming an expert committee and giving SEBI more authority.

India today is not what it was in the 1990s, and the stock market is not only for the wealthy, but also for a large portion of the middle class, the bench added.

The bench then directed SEBI to file a response by next Monday outlining how a more robust mechanism can be implemented.

“We have indicated to SG our concern with regard to ensuring that regulatory mechanism within the country is duly strengthened so that Indian investors are protected against sudden volatility which has been witnessed in recent 2 weeks,” the Court stated in its order.

The Bench was hearing two PILs in this regard.

One was filed by advocate Manohar Lal Sharma asking the SEBI and the Union Home Ministry to direct an investigation and file a FIR against Nathan Anderson, the founder of Hindenburg Research, and his associates in India for their recent report on the Adani Group.

Advocate Vishal Tiwari filed the second PIL, requesting the formation of a committee led by a retired Supreme Court Judge to investigate the contents of the Hindeburg Research Report.

The US-based Hindenburg company released a report on January 24 accusing the Adani Group of extensive manipulations and wrongdoing in order to artificially increase its stock values.

The share price of Adani has been plummeting ever since the Hindenburg report was released. The embattled group was also forced to recall its FPO (Follow-On Public Offer), with the tumbling down of stock prices.