Adani Hindenburg Case: "Will take appropriate action depending on outcome of investigations," SEBI to SC

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The Securities and Exchange Board of India (SEBI) on Friday told Supreme Court that out of the 24 investigations it conducted in the Adani-Hindenburg controversy, 22 are final in nature and two are interim. SEBI also assured the court that it would take appropriate action based on the outcome of the investigations in accordance with law.

SEBI said that the interim investigation covered 13 overseas Adani entities and it has sought details from five countries on FPIs (Foreign Portfolio Investors).

"As many of the entities linked to these foreign investors are located in tax haven jurisdictions, establishing the economic interest shareholders of the 12 FPIs remains a challenge," it said.

The report said, “It is submitted that out of the said 24 investigations, 22 are final in nature and 2 are interim in nature. As on date, the said 22 final investigation reports and one interim investigation report are approved by the competent authority in accordance with SEBI's extant practice and procedures”.

In the remaining one matter, interim findings are approved by the competent authority. It is further submitted with respect to the interim investigation reports that SEBI has sought information from external agencies/entities and upon receipt of such information will evaluate the same vis-a-vis the interim investigation report to determine further course of action, if any, in the said matters, it said.

Technically speaking, it pointed out that3 investigations are related to Related Party Transactions (RPT) - failure to disclose transactions with related parties and other relevant information while two investigations are related to manipulation of stock prices in contravention of existing laws.

It also said “Investigation covered 13 overseas entities (12 FPIs and 1 Foreign Entity), who were classified as public shareholders of the Adani Group Companies”. 

The status report said that the probe covered issues of minimum public shareholding - violation of Rule 19A of Securities Contracts (Regulation) Rules, 1957, manipulation of stock prices in contravention of existing laws, Related Party Transactions (RPT)-Failure to disclose transactions with related parties and other relevant information. The other issues looked into are possible violation of SEBI (Foreign Portfolio Investors) Regulations, 2014 and 2019, possible violation of SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011.

The report said the scope of investigation also included “analysis of the trading of FPI/ Foreign Entities named in the Hindenburg Report in the Adani group scrips on the allegation of manipulative wash trades or other forms of manipulative trades by the FPIs/foreign entities mentioned in the Hindenburg Report”.

The report added that the scope of investigation also involved analysis of the allegations made in respect of the delivery based trades undertaken by the alleged entities in the three Adani group scrips namely Adani Transmission Ltd, Adani Enterprises Ltd, and Adani Power Ltd.

Earlier, the Supreme Court had fixed August 14 as the deadline for SEBI to complete its investigation and submit the report. The matter is fixed for hearing on August 29.


The Supreme Court had earlier directed the Securities and Exchange Board of India (SEBI) to submit an overall report on the situation after, a US-based investment research firm named Hindenburg Research published a report titled 'Adani Group: How The World’s 3rd Richest Man Is Pulling The Largest Con In Corporate History', making allegations against the conglomerate, saying that the group has been involved 'in a brazen stock manipulation and accounting fraud scheme over the course of decades' on January 24. 

The top court had earlier directed the market regulator SEBI, to file its probe report with respect to Adani-Hindenburg case by August 14 but later extended the time period upon the market regulator's application seeking more time.

Notably, a batch of petitions seeking an investigation against US-based Hindenburg Research and others seeking an investigation against Adani Group over allegations made by Hindenburg Research were filed in February. 

On February 17, the top court had reserved its order in these batch while observing that it was inclined to maintain 'full transparency' in the matter.

It may be noted that recently, Solicitor General Tushar Mehta had submitted his apprehension before the Supreme Court appointing an expert committee to look into the Hindenburg Report.

"Existing agencies are fully equipped. However, responding to your lordships suggestions, we have no objection in constituting a committee. The only thing is, we don't want to send a message that a government agency needs to be overseen by a committee...", the SG had submitted before a CJI Chandrachud-led bench.

Case Title: Vishal Tiwari Vs. Union of India