Adani-Hindenburg report| "Not possible to conclude a regulatory failure on part of SEBI": Expert Committee

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On January 24, 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.' 

Taking into account the explanations provided by Securities and Exchange Board of India (SEBI), supported by empirical data, the Expert Committee appointed by the Supreme Court to review the regulatory mechanism in the light of Adani-Hindenburg issue has said that prima facie, it is not possible to conclude that there has been a regulatory failure around the allegation of price manipulation.

"...the Committee’s remit is not to examine whether the price rise was justified, whereas its remit is to ascertain if there was a regulatory failure. It is apparent that SEBI was actively engaged with developments and price movements in the market", the report adds.

Supreme Court has been further informed that SEBI has been investigating the matter since October 23, 2020 whereas the Hindenburg Report was published on January 24,2023 — two years and three months later.

"It is however for SEBI to conclude its investigations in accordance with law within a precise timeframe. SEBI has made an application to the Hon’ble Supreme Court seeking extension of time to investigate, the Committee is refraining from commenting on this issue", the report states.

Noting that the allegations in the Hindenburg Report are substantially based on publicly available information, the Expert Committee has observed that the manner in which the report has extrapolated the information and presented it, has led to a serious nose-dive in the prices of Adani stocks. The prices have undergone a correction and have improved but not to the level as existing prior to January 24, 2023, the date of publication of the Hindenburg Report, the Supreme Court appointed Expert Committee has said.

The Expert Committee headed by former Supreme Court judge, Justice AM Sapru, has further submitted that no price manipulation by Adani Group can be found.

No pattern of artificial trading or wash trades among the same parties multiple times was found and n coherent pattern of abusive trading came to light.

"As regards the trading period between April 1, 2018 and December 31, 2022 (the calendar month prior to the publication of the Hindenburg Report), the Committee learnt that a total of 849 alerts had been received from the automated system in respect of Adani group scrips. These include online alerts, complaints and references, and were examined by Stock Exchanges, applying the factors listed at the start of this sub-chapter...", the report adds.

Last week, the Expert Committee headed by former Supreme Court judge Justice AM Sapre, had submitted the instant report. CJI Chandrachud had then orally remarked, "The report of the committee appointed by this court headed by Justice Sapre has been submitted with the Registry, though we have not gotten a chance to read it."

Just two days ago SEBI was granted an extension of 3 months to complete its investigation into the Adani-Hindenburg Report issue as opposed to its original application seeking an extension of 6 months .


In March, the Top Court had constituted an expert committee headed also consisting of OP Bhat (former Chairman of SBI), retired Justice JP Devadhar, KV Kamath, Nandan Nilakeni, and Somasekharan Sundaresan as the members.

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.