SEBI submitted that in respect of the investigation relating to 12 suspicious transactions, these are complex and have many sub-transactions.
Capital markets regulator SEBI has not concluded any wrongdoing in its application to the country’s top court, seeking six more months to complete a probe into allegations against Adani Group, the conglomerate run by billionaire Gautam Adani said.
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The Supreme Court had on March 2 asked Securities and Exchange Board of India (SEBI) to conclude within two months its probe into allegations levelled by US short-seller Hindenburg Research against Adani Group.
SEBI was to file a status report on May 2 but on Saturday it made an application seeking extension. Hindenburg in January accused Adani Group of accounting fraud and using a web of companies in tax havens to inflate revenue and stock prices, even as debt piled up.
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The conglomerate has repeatedly denied all the allegations. SEBI in its application filed on Saturday stated that it needs six months to “arrive at conclusive finding” in case of those where “prima facie violations have been found” and “to revalidate the analysis and arrive at conclusive finding” where “prima facie violations have not been found.” Investigation/examination relating to 12 suspicious transactions, reveals that these “are complex and have many sub-transactions and a rigorous investigation of these transactions would require collation of data/information from various sources along with detailed analysis including verification of submissions made by the companies,” SEBI said in the application.
“It is pertinent to note that in the SEBI application filed before the Hon’ble Supreme Court, there are no conclusions of any alleged wrongdoing,” Adani Group said in a statement.
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“The SEBI application only cites the allegations made in the short-seller’s report, which are still under investigation.” The delay in the SEBI probe met with skepticism in some quarters.
“This is a joke. @SEBI_India has been investigating since October 2021 when they replied to my letter of July. While they prima facie see violations (no surprise)-they want 6 months to protect their favorite businessman so that he can get maximum time to cover up,” TMC MP Mahua Moitra tweeted.
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Priyanka Chaturvedi of Shiv Sena UBT hoped the SC would ensure that the SEBI investigation does not come in a sealed cover. “The public deserves to know the truth, hopefully CJI (chief justice of India) will truly end the sealed cover based judgements for the sake of transparency.” Quoting a news report of SEBI red flagging “12 suspicious transactions and possible stock price manipulations” and “possible case of insider trading,” she said, the six-month extension sought “is nothing but buying more time – maybe till General Elections?”
“Investigations are already ongoing by SEBI in some cases of Adani Group since 2021 and before, SC mandates investigation but till date even those haven’t been concluded.” General elections are due in May next year.
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In the statement, Adani said SEBI is conducting an investigation into allegations made by a foreign short-seller and also into market activity before and after release of its report on January 24.
“We understand that SEBI has approached the Hon’ble Supreme Court for more time to conclude its investigation,” it 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.” In its application to the Supreme Court, SEBI said it has crystallised two sets of categories for the probe. The first covers allegations made in the Hindenburg report. These allegations include “12 suspicious transactions for possible violations related to mis-representation of financials, circumvention of Regulations and/or fraudulent nature of transactions.” It also includes possible violations “related to related party transactions (RPT) disclosures, corporate governance related matters, minimum public shareholding (MPS) norms in the context of FPI shareholding and possible stock price manipulation in various stocks of Adani Group,” the application, seen by PTI, said.
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The second category relates to trading in Adani Group stocks in the periods pre and post Hindenburg Report. The probe in this category includes possible violations of FPI regulations, ODI norms, insider trading regulations and norms of short selling.
“SEBI has submitted a detailed status report and the prima facie findings to the Committee in compliance with the order passed by this Hon’ble Court,” the application said adding possible violations related to RPT, corporate governance, MPS, price manipulations and ODI norms require further time for conclusion.
SEBI submitted that in respect of the investigation relating to 12 suspicious transactions, these are complex and have many sub-transactions.
A rigorous investigation of these transactions would require collation of data from various sources along with detailed analysis including verification of submissions made by the companies, it said.
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The apex court, while directing the setting up of a six-member committee headed by former apex court judge Justice A M Sapre for the assessment of the extant regulatory framework and for making recommendations to strengthen the process, had said that it was appropriate to set up such a panel of experts in order to protect Indian investors against the volatility of the kind which has been witnessed in the recent past.
The Justice Sapre panel is to be provided assistance by the Centre and other statutory agencies including the SEBI chairperson. The Centre had agreed to the apex court’s proposal to set up a committee, to be headed by a former Supreme Court judge, to go into the regulatory regimes.
