SC Asks SEBI To Form Committee To Probe Adani Issue

Adani Hindenburg

The Supreme Court recently asked the SEBI government to form a committee to probe Hindenburg research report on Adani conglomerate.

The Central Government told the Supreme Court that the Securities and Exchange Board of India (SEBI) is completely equipped to deal with the fallout of the Hindenburg Research report.

Representing SEBI, Solicitor General (SG) Tushar Mehta made a submission to this effect before a Bench of Chief Justice of India DY Chandrachud and Justice PS Narasimha and Justice  JB Pardiwala.

SG Mehta also informed the Court that the Central Government has no objection to the formation of a committee to investigate related issues, as long as the SEBI’s expertise is not jeopardised.

“I have instructions that SEBI is completely equipped to deal with what has happened. But government has no objection to committee. But remit of committee is important since it has an effect internationally and if we can suggest remit of committee in sealed cover. We don’t want to undermine the expertise of the regulator,” Mehta informed.

“Please come on Friday and inform us about the remit of the committee so that we have something in front of us,” the CJI replied.

Mehta assured the Court that it would be circulated by Wednesday, February 15th.

SEBI stated in its affidavit that the regulator has been investigating the allegations made in the Hindenburg report, as well as the market activity preceding and following the report’s publication, to identify any legal violations. Because this examination is in its early stages, it may not be appropriate to list details about it at this time, according to the affidavit.

Previously, the Court expressed concern that Indian investors had suffered losses totaling several lakh crores as a result of the drop in share prices of Adani Group companies following the publication of the Hindenburg report. As a result, the Court asked SEBI to recommend measures to protect Indian investors in the future.

In response, the SEBI has stated that it is now fully and adequately empowered to ensure the stability and development of the securities markets, as well as the protection of investors. Notably, SEBI has also stated that the events under consideration “had no significant impact at the systemic level.”

The Court was hearing two petitions concerning the Adani Group report published by short-seller Hindenburg Research, alleging fraud on the part of the conglomerate, which resulted in losses exceeding $100 billion.

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.

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

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About the Author: Nunnem Gangte