Adani Saga: SEBI flags drawing premature conclusions in probe

The Securities and Exchange Board of India submitted that any incorrect or premature conclusion of its investigation would be “legally untenable” and not “serve the ends of justice”

Representative image of the Securities and Exchange Board of India logo on its headquarters in Mumbai. (Photo: IANS)
Representative image of the Securities and Exchange Board of India logo on its headquarters in Mumbai. (Photo: IANS)

Aditya Anand

In a significant development, the market regulator, the Securities and Exchange Board of India (SEBI), informed the Supreme Court on Monday that drawing incorrect or premature conclusions in the ongoing investigation into potential lapses of regulatory disclosures by the Adani Group would be "legally unsustainable" and "fail to serve the cause of justice."

In its filing, SEBI revealed that it had taken proactive measures by reaching out to 11 foreign regulatory bodies to obtain information about the Adani Group's compliance with norms governing its publicly available shares. These efforts signify SEBI's commitment to examining any possible violations and ensuring a comprehensive investigation thoroughly.

SEBI submitted to the Supreme Court that a thorough analysis of the documents obtained from various sources is necessary before reaching conclusive findings regarding the ongoing investigation. The regulator emphasised the importance of conducting a comprehensive examination to ensure accurate and reliable results.

The Supreme Court is deliberating SEBI's appeal for an additional six-month extension to complete its probe into the Adani group. The investigation was initiated following the release of a report by US-based short-seller Hindenburg Research in January.

The report raised concerns about the governance practices of the billionaire Gautam Adani's conglomerate, alleging the improper utilisation of tax havens and manipulation of stocks. It is worth noting that the Adani group has vehemently refuted all allegations made against it.

In its recent affidavit, the Securities and Exchange Board of India (SEBI) has refuted claims suggesting that it has been investigating the Adani Group since 2016. The affidavit clarified that the investigation referred to by the petitioners pertained to the issuance of Global Depository Receipts (GDRs) by 51 India-listed companies, which was unrelated to the concerns raised in the Hindenburg report.

Regarding the probe into Minimum Public Shareholding (MPS) norms, SEBI has already taken action by reaching out to 11 overseas regulators under the Multilateral Memorandum of Understanding (MMOU) with the International Organization of Securities Commissions (IOSCO). The market regulator has submitted various requests for information to these regulators, with the initial communication being sent on October 6, 2020.

In the context of the examination concerning the 12 transactions mentioned in the Hindenburg Report, the affidavit highlights their highly intricate nature and involvement across multiple jurisdictions.

SEBI acknowledges that conducting a comprehensive investigation into these transactions would necessitate collating data and information from diverse sources, including bank statements from numerous domestic and international banks, financial statements of onshore and offshore entities involved in the transactions, and contracts and agreements, if any.

The affidavit underscores the importance of meticulously analysing the received documents before arriving at conclusive findings.

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