Six entities took short positions on Adani stocks ahead of Hindenburg report: SC panel

An expert committee constituted by Supreme Court to oversee investigations into Adani Group said markets regulator Sebi had “drawn a blank” over Hindenburg's allegations against the conglomerate.

The Justice A M Sapre committee report also said there was evidence of a build-up in short positions on Adani Group stocks ahead of US short seller Hindenburg Research's report, which was released on January 24, 2023.

"Suspicious trading has been observed on the part of six entities. These are four FPIs (not from among the 12 FPIs suspected in relation to minimum public shareholding), one body corporate and one individual," the report said, which was seen on Friday.

"Trading pattern here is suspicious because of the build-up of short positions by these entities in the Adani scrips prior to the Hindenburg Report, and substantial profits earned by them by squaring off their short positions after publication of the Hindenburg report on January 24, 2023. Detailed investigation is ongoing," the report stated.

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It's not possible to currently conclude whether there has been regulatory failure regarding price manipulations, the committee said in the report.

The apex court formed the panel to examine the regulatory framework and allegations levelled against billionaire Gautam Adani's conglomerate.

In January Hindenburg Research raised several governance concerns around the Adani Group, alleging improper use of tax havens and stock manipulation by the ports-to-energy conglomerate. The group has denied all the allegations.

An expert committee appointed by the Supreme Court to investigate allegations around Adani Group said it was not possible to conclude if there has been regulatory failure on stock price manipulation allegations.

The panel made the same observation in relation to disclosures of related party transactions.

The expert committee in a report said the Indian stock market as a whole was not unduly volatile post January 24, when Hindenburg came out with its damning report.

"The foundation of SEBI's (Securities and Exchange Board of India's) suspicion that led to investigations into the overseas entities' ownership is that they have 'opaque' structures," said the panel in a report dated May 6. "The ultimate chain of ownership above the 13 overseas entities is not clear."

Shares of Adani's flagship arm Adani Enterprises Ltd rose nearly 4% after the report.