SEBI Submits Status Report in SC on Adani-Hindenburg Issue

Moneylife Digital Team 25 August 2023

Market regulator Securities and Exchange Board of India (SEBI) has submitted a status report before the Supreme Court on its investigation report on the Adani-Hindenburg issue, including alleged stock market manipulation in the scrips of Adani group companies.

The market regulator says that it has examined 24 matters in compliance with orders of the SC. "Out of the 24 investigations, 22 are final investigation reports, and one interim investigation report is 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 and 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," the market regulator says.

According to the status report, the majority of 13 investigations are about related-party transactions (RPTs), followed by five investigations on possible violation of SEBI prohibition of insider trading (PIT) regulations. Two investigations are related with the manipulation of stock prices in contravention of existing laws. SEBI is also investigating minimum public shareholding (MPS), possible violations of SEBI foreign portfolio investor (FPI) regulations, substantial acquisition of shares and takeovers (SAST), and trading in pre and post-Hindenburg reports.

SEBI says its investigation on MPS covered 13 overseas entities (12 FPIs and one foreign entity), which were classified as public shareholders of the Adani group companies. "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. However, efforts are still being made to gather details from five foreign jurisdictions pertaining to the economic interest shareholders of the FPIs to help SEBI to update the (interim) report accordingly," it added.

It may be recalled that the Supreme Court-appointed' expert' committee had identified SEBI's dilution of rules as an obstacle to identifying the ultimate economic beneficiaries of key offshore funds that had large investments in Adani group companies.

In July, SEBI submitted a 41-page affidavit to the Supreme Court regarding the Adani-Hindenburg case. In the filing, SEBI upheld its 2019 reporting rule changes for offshore funds, stating they did not hinder the identification efforts of ultimate fund beneficiaries.

Responding to the expert committee's observation that the proceedings initiated by SEBI in 2021-22 have 'skyrocketed', it said that the increase was due to the large number of adjudication proceedings in 'illiquid stock options' (ISO) matters. (Read: SEBI Seeks 15 More Days To File Its Report on Adani-Hindenburg Issue)