A US short seller has accused the Adani Group of corporate misconduct, and India’s highest court has ordered the market regulator to examine any securities legislation or regulatory disclosure violations. As Adani Group shares plummeted, the Supreme Court established an investor protection panel on Thursday. The Indian markets regulator SEBI is reviewing Hindenburg Research’s January 24 report alleging the Adani Group utilized offshore tax havens and manipulated stocks. Denying it, the multinational.
SEBI earlier informed the court that it was studying the Hindenburg report’s accusations and market action before and after its publication. “Whether there has been a failure to declare transactions with connected parties” and “whether there was any manipulation of stock prices in defiance of existing laws” were the Supreme Court’s requests to SEBI. The three-judge panel, led by Chief Justice of India D Y Chandrachud, heard multiple public-interest litigations on investor losses caused by the Hindenburg report’s stock market meltdown. After the report was released, seven Adani Group listed firms have lost $135bn. The Supreme Court ruling was applauded by Gautam Adani. “It will provide conclusion in a timely way. He tweeted, “Truth shall win.” In its study, Hindenburg Research claimed that both listed and private Adani entities had engaged in “undisclosed related party transactions” in breach of Indian disclosure regulations. Adani responded that “all linked party transactions are at arm’s length, appropriately reported and reviewed/audited by statutory independent auditors”. A retired Supreme Court judge convened an expert team to study investor protection methods. Former State Bank of India chairman O P Bhatt and senior banker K V Kamath will serve on the six-member group, which must report back within two months. “To offer an overall appraisal of the situation,” Chandrachud added.
Last week, Adani organized a fixed-income roadshow in Singapore and Hong Kong to soothe investors. According to insiders, the firm has informed creditors of a $3bn sovereign wealth fund loan. The expert group will investigate Adani claims and recommend ways to increase investor safeguards and regulatory control. After Hindenburg’s report, Adani Enterprises cancelled a $2.5bn share sale. Opposition parties delayed parliamentary proceedings last month to demand an inquiry of Gautam Adani’s business transactions, who is thought to be close to Prime Minister Narendra Modi.
