The Hindenburg report, which has leveled numerous accusations against the business group helmed by billionaire Gautam Adani, was referenced by the Supreme Court on Friday, and the court requested SEBI’s reaction. The court has requested that SEBI appear and brief the court on how to guarantee investor protection going forward. Additionally, it has requested information from the authority on the current structure and suggestions for strengthening the legal framework.
After a study by Hindenburg Research questioned the conglomerate’s levels of debt and use of tax havens, seven listed Adani Group companies lost more than half of their market capitalization, which shrank to less than $100 billion. Adani, whose fortunes had been steadily improving in recent years, also abruptly announced the cancellation of its successful follow-on public offer for Rs 20,000 crore the day prior. Following the cancellation of the share offering, investor sentiment was severely shaken.
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The Adani Group denied the stock manipulation claim, claiming it was unfounded and based on a misunderstanding of Indian law. The group companies have “consistently de-leveraged,” according to the company, during the last ten years.
Congresswoman Dr. Jaya Thakur filed the petition, in which she claims that Gautam Adani and his accomplices “swindled lakhs of crores of public money.” The petitioner requests an investigation by law enforcement agencies such as the CBI, ED, DRI, SEBI, RBI, and SFIO, among others, under the oversight and control of an active Supreme Court judge. It should be mentioned that the Supreme Court is currently deliberating over two further PILs that call for an investigation into Hindenburg Research for allegedly manipulating the stock market through short-selling. Last Friday, as it was reviewing the petitions, the Supreme Court voiced its concern about how to protect Indian investors from this kind of market volatility and asked the Union Government and SEBI for their opinions on how to make the regulatory system stronger.
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According to the bench headed by CJI DY Chandrachud, an expert committee should be formed to assess the regulatory structure. The Court was careful to stress that it wasn’t questioning the authority of SEBI or other authorities while making these observations. The Center has no objections to the suggestion to form an expert committee, according to the Solicitor General of India, Tushar Mehta, who also informed the Court that the committee’s mandate should be clearly defined to prevent any impression being given to domestic or foreign investors that the current regulatory framework is inadequate.
Dr. Thakur’s appeal, which was submitted today, includes various accusations of wrongdoing against the Adani Group. According to the lawsuit, the Hindenburg investigation reveals that Gautam Adani, his brother, and their colleagues engaged in massive amounts of money laundering using a variety of offshore shell companies they established in various tax havens. The petitioner further claims that it should be looked into whether investments in Adani Group companies by LIC and SBI violated their obligations to investors and the general public.