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With its investigation into purported irregularities in Global Depository Receipts (GDRs) in the Adani SEBI hearing (Securities and Exchange Board of India), the SEBI has refrained from looking into the Adani Group. A GDR is a convertible note that can be used to trade shares of foreign companies on regional stock exchanges. The testimony, which SEBI assistant manager Satyansh Maurya presented, attempted to refute the claim made by petitioner Anamika Jaiswal.
He petitioned the top court to look into US-based short seller Hindenburg Research’s accusations of “brazen stock manipulation and accounting fraud” against the Adani Group. Before this, Prashant Bhushan, Jaiswal’s attorney, asserted that SEBI had been looking into the Adani Group since 2016. The statement was made in opposition to SEBI’s request for additional time to finish the regulator’s investigation into the alleged legal violation by the Adani Group.
Global depository receipts (GDRs) misuse
The SEBI informed the Supreme Court on May 15, 2023, that it has not looked into any allegations of misuse of global depository receipts (GDRs) to route black money or any other infraction against publicly traded Adani Group companies since 2016. SEBI denied the allegation that some Adani Group companies have been under investigation for possible legal violations since 2016. Instead, SEBI restated its request for an extra six months to complete its investigation into the Adani-Hindenburg incident to “ensure carriage of justice.”
However, SEBI’s statement from May 15, 2023, contradicts what junior finance minister Pankaj Chaudhary said in parliament in July 2021 when he claimed that the Adani SEBI case was about non-compliance with regulations. The finance ministry said the government remains committed to its written response in the Lok Sabha, based on a thorough investigation and input from all relevant agencies.
Claims are baseless says market regulator SEBI in the Adani SEBI case
On 15th May 2023, the Securities and Exchange Board of India, the market regulator, informed the Supreme Court that assertions that it had been looking into the Adani Group since 2016 were “factually baseless”. SEBI submitted an affidavit to a bench led by Chief Justice DY Chandrachud, considering two petitions requesting an investigation into claims that the Gautam Adani-led conglomerate had manipulated stocks. The markets regulator stated in its affidavit that 51 Indian companies’ global depository receipts were the subject of the investigation.
In its statement in the Adani SEBI case, SEBI said that none of the listed Adani Group companies were included in the aforementioned 51 companies. Certificates issued by banks to represent shares of an overseas company traded on a domestic stock exchange are known as global depository receipts. According to a 2021 Lok Sabha reply from the Union Finance Ministry, SEBI looked into the Adani Group’s regulatory compliance.
SEBI also issued a warning, stating that any erroneous or premature ruling in the Adani SEBI case made without considering all available information would be unjust and impractical from a legal standpoint. In a rejoinder affidavit filed with the Supreme Court, SEBI stated: “There is no factual basis for the allegation that SEBI has been investigating Adani since 2016.”
As part of the Multilateral Memorandum of Understanding (MMOU) with the International Organisation of Security Commissions (IOSCO), SEBI has already contacted eleven foreign regulators in the context of its investigation into Minimum Public Shareholding (MPS) standards. These Regulators received several information requests. The first request was submitted to foreign regulators as early as 6th October 2020.
No irregularities in the Adani SEBI case currently
The market watchdog SEBI has stated that it is investigating the claims made against the Gautam Adani-led conglomerate in its report from January by US-based short seller Hindenburg Research. According to a report, SEBI is looking into the allegations made by the Adani Group and Heinrich, but no anomalies have yet been discovered in the documents. But as of yet, no formal statement regarding the Adani SEBI investigation has been made.
According to the report, SEBI is closely examining the listed companies of the Adani Group, including how they operate and trade shares. However, the market watchdog has clarified that its actions should not be interpreted as part of an official investigation. The American short-seller Hindenburg Research made accusations against the Adani Group of Companies. SEBI informed the Supreme Court on 13th February 2023 that it was “enquiring” into these claims and their potential effects on the markets.
SEBI stated that it was investigating the Group’s overall market activities “before and following the report’s publication to find out whether there had been any infractions of its regulations.” Publicly released on 24th January 2023, the Hindenburg report charged the Adani Group with “brazen stock manipulation and accounting fraud for decades.” It claimed that the Indian conglomerate used shell companies for fraud and stock manipulation.
The short seller’s report, which claimed that major listed Adani companies had taken on significant debt and that the Group was “on precarious financial footing” due to the pledge of shares of their “inflated stock” as collateral for loans, was unfounded.
