The Supreme Court-appointed Expert Committee recently made a significant announcement regarding the Adani-Hindenburg controversy. According to the committee, it is currently unable to determine whether SEBI’s handling of the alleged securities law contravention by the Adani Group or other companies constitutes “regulatory failure.”
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The committee’s goal is to assess the situation and recommend measures to promote investor awareness, strengthen the statutory framework, and ensure compliance with existing regulations.
The committee emphasizes the importance of an effective and consistent enforcement policy aligned with legislative policies to ensure regulatory resources are not wasted on retrospective actions. SEBI has an active surveillance framework in place and has analyzed potential market abuse alerts for Adani stocks, finding no evidence of artificial trading.
Some entities did profit from short positions after the publication of the report, but based on SEBI’s explanations and empirical data, the committee cannot conclude that there has been regulatory failure regarding the allegation of price manipulation.
The US-based Hindenburg company released a report on January 24 in which it accused the Adani Group of engaging in extensive stock price manipulation and other unethical behaviour.
The Adani Group responded to the accusations with a 413-page response. The court established a committee on March 2, 2023, and named the following individuals as its members: Mr. OP Bhat (former Chairman of SBI), retired Justice JP Devadhar, Mr. KV Kamath, Mr. Nandan Nilakeni, and Mr. Somasekharan Sundaresan.
The former Supreme Court justice Justice AM Sapre was said to be in charge of the Committee. The committee was ordered by the court to present its report to this court in a sealed cover within two months. The court stated that SEBI’s authority to continue its probe into the volatility in the Indian securities market was not diminished by the creation of the expert committee. Additionally, SEBI was instructed to provide a status report within a two-month window.
Later, the SEBI requested a six-month extension from the Supreme Court in order to finish its investigation into the charges. The regulatory body stated that examinations and investigations for which additional time would be needed would fall into three general categories:
According to the Multilateral Memorandum of Understanding (MMOU) between SEBI and the International Organisation of Securities Commissions (IOSCO), which relates to its investigation into Minimum Public Shareholding (MPS) norms, SEBI has already contacted eleven foreign regulators. The Supreme Court decided to give SEBI until August 14, 2023 to finish its investigation into claims of stock price manipulation filed against Adani Group firms by a US-based short selling firm.
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