Supreme Court’s Six-Member Panel Releases Report on Adani-Hindenburg Controversy: Unveiling Key Findings and Ongoing Investigations

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Adani: A report by a Supreme Court-appointed panel, tasked with examining the role of India’s market regulator in safeguarding the interests of small investors in Adani Group stocks, has been made public. The panel’s findings indicate that the Securities and Exchange Board of India (SEBI) has raised suspicions regarding potential connections between 13 foreign funds that invested in the Adani Group and the company’s promoters.

The report sheds light on SEBI’s concerns surrounding the nature of investments made by these 13 foreign funds in the Adani Group. While the specific details of these suspicions have not been disclosed, the report underscores the need for further investigation to determine any potential links between the funds and the promoters of the conglomerate.

The Supreme Court panel was constituted to investigate allegations of regulatory oversight and protection of small investors’ interests in the Adani Group. Its role was to evaluate whether SEBI effectively fulfilled its responsibilities in ensuring fair market practices and safeguarding the rights of individual investors in relation to the Adani Group’s stocks.

Investigation Finds No Market Manipulation by Adani Group But Raises Concerns on Short Positions and Profits

The report from the six-member special panel appointed by the Supreme Court to investigate the Adani-Hindenburg controversy has been released. The panel found no evidence of market manipulation by the Adani group, but it noted the presence of entities that took short positions and profited from the Hindenburg report. The report calls for further investigation into these entities. Additionally, a separate probe on the Adani group is underway, with the Securities and Exchange Board of India (SEBI) expected to submit its findings by August 14. Here are the key takeaways from the panel’s report:

  1. Adani Group’s Disclosure of Beneficial Owners: The panel concluded that the Adani group has disclosed all beneficial owners of the company, with no charges from SEBI regarding the rejection of the group’s declarations.

  2. Increase in Retail Shareholding: Contrary to expectations, the Hindenburg Report led to an increase in retail shareholding of the Adani group.

  3. Profits from Short selling: Certain entities made profits through short positions after the release of the Hindenburg report. This finding warrants further investigation.

  4. No Prima Facie Violation of Rules or Laws: The panel did not find any clear violation of existing rules or laws by the Adani group.

  5. Lack of Sufficient Information on Overseas Entities: SEBI is still lacking sufficient information on 13 overseas entities and 42 contributors to assets under management. Further efforts are needed to gather relevant data.

  6. SEBI’s Decision on Discovery of Entities and Potential Cases: The report leaves it to SEBI to determine whether the pending discovery of 13 entities is necessary and if further action needs to be taken.

  7. No Prima Facie Charges by SEBI: While referring the case to the Enforcement Directorate, SEBI did not make any prima facie charges against the Adani group.

  8. Stable Adani Stocks: Adani stocks have stabilized at a new price discovery without causing market destabilization.

  9. Adani Group’s Investor Comfort: The panel acknowledges that the Adani Group has made efforts to comfort investors during the controversy.

  10. Supreme Court’s Review and Future Hearings: The Supreme Court will carefully examine the report by the six-member panel and resume hearing the case on July 11, following the summer recess.

The panel, chaired by former Supreme Court judge AM Sapre and comprising individuals with expertise in law, finance, and securities, was given a two-month period to investigate the alleged violations mentioned in the Hindenburg report. The report, submitted on May 8, will be further scrutinized by the Supreme Court. Meanwhile, ongoing investigations and SEBI’s forthcoming report aim to shed more light on the Adani-Hindenburg row and ensure transparency and accountability in the market.

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