The Supreme Court will announce its order on a bunch of PILs seeking probe into allegations of fraud against the Adani Group, following the Hindenburg Research report. The report caused a massive selloff of Adani stocks and wiped off billions of dollars. The apex court will decide on setting up of a panel of domain experts to strengthen the existing regulatory measures for stock markets. This comes after the court refused to accept the names of the panelists submitted by the government in a sealed cover. The court said that it wanted full transparency in the case.
Gautam Adani, who has been denying the Hindenburg allegations, said that he welcomes the Supreme Court decision. "The Adani Group welcomes the order of the Hon'ble Supreme Court. It will bring finality in a time bound manner. Truth will prevail," he said.
The report to be submitted by the 6-member committee will be in a sealed cover. It must be mentioned that the court rejected the sealed-cover suggestions for the panelists submitted by the government.
Here's what the Supreme Court order stated:
1. SEBI to investigate if there were any violations of market norms, stock manipulation
2. SEBI to submit report within 2 months
3. 6-member expert committee formed, to be headed by former Justice AM Sapre
The court stated that SEBI in its note submitted that it is empowered to put in frameworks and has put in extant framework. SEBI stated that it is inquiring into both Hindenburg report and the allegations raised in the report, including violation of insider trading norms, foreign portfolio rules etc
SEBI will investigate the violation of security regulation rules, and whether there was manipulation of stock pricing. SEBI will expeditiously conclude the investigation and file status report in 2 months. "Constitution of expert committee doesn’t divest SEBI from its duty of investigating volatility in the market," the apex court stated.
The Supreme Court has set up an expert committee to help in the Adani-Hindenburg case. The committee will review the extant frame to protect Indian investors. The six-member committee will include:
OP Bhatt
Justice KP Devdatt
KV Kamat
Nandan Nilekani
Somasekhar Sundaresan
Justice AM Sapre will head the committee
SEBI shall conclude investigation within 2 months and submit a report, said SC. SEBI must investigate if there has been violation, manipulation of stock pricing, said SC. SC sets up expert committee, asks SEBI to submit report of ongoing investigation to committee.
"The present batch of petitions concern the loss of investor wealth due to decline in share prices of Adani group company. This decline in share prices was precipitated due to the report by the Hindenburg group stating that Adani group had acted against SEBI regulations. The report states that Hindenburg group had taken a short position on Adani group shares," the SC said.
8.86 crore equity shares of Adani Ports & Special Economic Zone, 5.56 crore equity shares of Adani Green Energy, and 2.84 crore equity shares of Adani Transmission exchanged hands in the pre-opening session on Thursday.
Shares of Adani Enterprises fell 10 per cent on Thursday after the group denied reports that suggested it was securing a fresh $3 billion loan from an unnamed sovereign fund. A few other Adani group stocks jumped up to 5 per cent after a slew of block deals took place on the counters. Adani Green Energy rose another 5 per cent to Rs 535.25, Adani Transmission gained 5 per cent to Rs 708.35, and Adani Ports was down 0.7 per cent at Rs 598.
Hindenburg Research, on January 24, published a scathing report accusing the Adani conglomerate of accounting fraud, stock manipulation and other malpractices. Adani Group denied the allegations, and said that the short-seller stood to benefit if the stocks of the group crashed. It also released a 413-page reply to the accusations. It also withdrew its fully-subscribed FPO.
The bench hearing the Adani-Hindenburg case comprises Chief Justice of India DY Chandrachud, Justice PS Narasimha and Justice JB Pardiwala.
One of the PILs sought a direction to the Centre to constitute a committee monitored by a retired apex court judge to inquire into the Hindenburg Research report, while the other one sought prosecution of short-seller Nathan Anderson of Hindenburg Research and his associates in India and the US for allegedly exploiting innocent investors and the "artificial crashing" of the Adani Group's stock value in the market.
"We don't want sealed cover suggestions. Even if we don't accept your suggestions, the other side will have the impression that we accepted the government-adopted committee. I want to have complete transparency. We will appoint our own committee and a sense of trust should be there," said CJI Chandrachud.
The apex court, on February 17, stated that “true facts” should come out from the expert panel without impacting stock markets.
On February 10, the apex court said that the interests of Indian investors needed to be protected against market volatility in the backdrop of the Adani stock rout. It then asked the Centre to consider setting up a panel of domain experts to help in the matter and strengthen regulatory measures.
The Supreme Court rejected a plea that sought to gag the media in the Adani-Hindenburg case. Turning down the plea, Chief Justice of India DY Chandrachud said, "We are not going to issue any injunction to the media."
Market regulator SEBI is already investigating the crash in Adani stocks and the allegations made by Hindenburg against the conglomerate.
Four PILs have been filed in the Supreme Court on the Adani-Hindenburg issue by lawyers M L Sharma, Vishal Tiwari, Congress leader Jaya Thakur and social activist Mukesh Kumar.