Sebi notice to Hindenburg, Supreme Court also slapped short seller

New Delhi:

In January last year, the Securities and Exchange Board of India (SEBI) filed a case against American short-seller Hindenburg Research as well as Nathan Anderson and Mauritius-based FPI for misleading Mark Kingdon to profit through shares of Adani Group companies. According to SEBI, Hindenburg Research and FPI issued a misleading disclaimer stating that their report was only for valuation of securities traded outside India, but the report clearly related to companies listed in India.

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In January, 2024, Adani Group got SC approval on a clean chit

Earlier, after several months of inquiry by the expert committee and SEBI on the Hindenburg report, the Supreme Court had also allowed the clean chit given to the Adani group in January this year. The Supreme Court had so far said that SEBI’s investigation was conducted as per the rules, and there was no flaw in it, so there was no justification left in the matter being investigated by the SIT. The Supreme Court also rebuked American short sellers for profiting from the Hindenburg Research report.

The SC said there was no reason to hand over the probe to any other agency.

The Supreme Court also refused to transfer the probe to any central probe agency and said that now the petitioners have to present concrete evidence that SEBI and the expert committee conducted the probe in a biased manner. In this decision, the Supreme Court ordered the central government and SEBI to act on the recommendations of the expert committee to strengthen the interests of Indian investors.

Newspaper reports, external bodies not to be trusted: SC

We find Sebi’s arguments logical, and there is no reason for us to interfere with legislative authority, the Supreme Court said. According to the Supreme Court, it is not appropriate to rely on newspaper reports and external bodies to raise questions on statutory regulators. Such reports can be considered as inputs, but cannot be considered as conclusive evidence to cast doubt on SEBI’s investigation.

An inquiry was ordered on March 2, 2023

In fact, after the Hindenburg Research report and the Adani Group’s reply in January 2023, 4 PILs, i.e. Public Interest Litigation, were filed in the Supreme Court, appealing for the issuance of inquiry orders against the Adani Group. In the context of these petitions, on March 2, 2023, the Supreme Court ordered SEBI to investigate allegations of manipulation of Adani Group’s disclosures and share prices. The court in its order clearly said that SEBI should investigate the allegations of violation of existing norms by the Adani Group.

SEBI gave clean chit to Adani Group on August 25, 2023

SEBI was ordered to submit the probe report within 2 months, but SEBI sought 6 months from the court in April 2023. After this, the court gave SEBI time till August 14, 2023 for investigation, and on August 14 SEBI sought 15 additional days. Subsequently, in a report submitted on August 25, 2023, SEBI said that the investigation of 22 out of 24 cases had been completed, and two cases could not be completed due to delays by foreign entities.

The Adani Group had from the beginning dismissed Hindenburg’s allegations as baseless.

Ever since the release of the Hindenburg Report last year, the Adani Group has termed the allegations in the report as false and baseless, and the group termed the report as an attack on India’s progress. Now after all Hindenburg’s allegations have been proved wrong in the investigation by the expert committee and SEBI, the chairman of the group, Gautam Adani, mentioned the short seller’s attack in the annual general meeting of the group’s flagship company, Adani Enterprises, and said that the group will emerge. It grew stronger from the attack, and proves that any kind of challenge can undermine a group’s fundamental strength. He said, “The real measure of success is the ability to stand firm in the face of adversity…”

(Disclaimer: New Delhi Television is a subsidiary of AMG Media Networks Limited, an Adani group company.)