Sebi Presents Adani Report To Supreme Court, Concludes Investigation
Sebi, India's market regulatory body has concluded its inquiry into potential breaches of securities laws by companies within the Adani Group, according to its submission to the Supreme Court on Friday. The investigation covered a total of 24 transactions, with conclusive results reached for 22 of them. While the status report outlines the exhaustive measures undertaken by the Securities and Exchange Board of India (SEBI) during its probe, it abstains from disclosing specific findings.
The regulatory authority stated its intention to take "appropriate action based on the outcome of the investigations in accordance with law."
The highest court is slated to address this matter on 29 August.
Previously, the Supreme Court had instructed Sebi to present its status report on the inquiry into accusations raised by Hindenburg Research, a short-selling entity, in its January report against the Adani Group. The report alleged fraudulent activities and manipulation, claims that Adani vehemently refuted.
Sebi conducted 13 examinations into transactions involving related parties. Additionally, it looked into five instances connected to potential breaches of insider trading regulations.
Sebi's Actions
The investigations encompassed two instances of stock price manipulation, as well as individual cases involving minimum public ownership regulations, foreign portfolio investors, the takeover code, and trading activities before and after the release of the Hindenburg report.
The investigation into related-party transactions aimed to determine allegations concerning potential misrepresentation in financial statements, misstatements, attempts to circumvent regulations, and possible fraudulent transactions. This inquiry was conducted under various SEBI rules.
Sebi scrutinised over 33,000 pages of documents, issued 90 summonses for personal appearances, and dispatched over 1,000 emails in order to investigate related-party transactions spanning from 1 April 2005, to 31 March 2023. The transactions of companies such as Adani Power, Adani Enterprises, Adani Infra (India), Adani Mining, and Adani Estates were examined.
Regarding the alleged violations of minimum public ownership norms, Sebi's investigation extended to 13 overseas entities classified as public shareholders in Adani Group entities. The time frame investigated ranged from 1 April 2016, to 30 September 2020.
Since numerous entities associated with these foreign investors are located in offshore tax havens, establishing the financial interests of the shareholders remains a challenge. The regulatory authority noted ongoing efforts to gather information from five foreign jurisdictions. Sebi issued 90 letters requesting assistance from external entities, served 100 summonses for document submission, and analysed around 12,000 pages of documents.
Sebi also probed potential insider trading in the shares of Adani Power, Ambuja Cements, and Adani Green Energy during the period spanning from 28 January 2021 to 15 October 2022. This examination involved the scrutiny of about 9,500 pages of documents, 100 summonses for personal appearances, and the recording of 90 statements under oath.
In connection with alleged price volume manipulation, Sebi conducted a comprehensive analysis concerning seven Adani Group stocks, including Adani Enterprises, Adani Ports & SEZ, Adani Green Energy, Adani Transmission, Adani Power, Adani Total Gas, and Adani Wilmar. The trading activities of three groups of foreign portfolio investors (FPIs) within these stocks between 1 March 2020 and 31 December 2022, were thoroughly examined.
Sebi also investigated claims of manipulative trading made by foreign entities mentioned in the Hindenburg report.
Furthermore, Sebi explored whether there were any unusual short positions taken by specific entities in Adani Group companies around the time of the report's release. This investigation encompassed the period from 18 January 2023, to 31 January 2023.
