Adani Group-Hindenburg issue: Sebi moves Supreme Court, seeks 15-day extension to complete probe

Capital markets regulator Securities and Exchange Board of India (Sebi) on Monday moved the Supreme Court seeking a 15-day extension of the deadline to conclude its investigation into the US-based short-seller Hindenburg Research's allegations against the Gautam Adani-led ports-to-power conglomerate Adani Group. The Sebi also sought an extension of the deadline to submit the status report.

In May this year, the Supreme Court gave the capital markets regulator a deadline of August 14 to submit an updated status report on the matter. The Chief Justice of India (CJI)-led bench said at the time that the issue regarding the non-compliance of minimum public shareholding (MPS) norms flagged by Hindenburg has some weight.

The capital markets regulator, in its latest response, told the Supreme Court that it is waiting for information from agencies in foreign jurisdiction in some cases. It also added that reports are in the process of being approved by the competent authority in some cases.

Where has the Sebi's probe on Hindenburg's allegations against moved so far?

The Sebi said in its latest application that it has examined/investigated 24 matters, of which 17 are final and complete. These investigations have been approved by the competent authority in keeping with Sebi's practice and procedures.

Sebi added that it has sought information from foreign agencies and regulators in some cases. Of the seven remaining matters, in one matter Sebi has completed the investigation based on the material gathered. The regulator further noted that it has prepared the interim report, which has been approved by the competent authority.

In four other matters, findings have been crystallised and the report has been prepared. In these matters, the report is in the process of being approved by the competent authority. In the remaining two matters, investigation is in advanced stage in one matter whereas an interim report is under preparation basis the information gathered by Sebi so far in another matter.

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What are Hindenburg's allegations against Adani Group?

The Hindenburg Research report, which was released in January this year, accused Adani Group of stock manipulation, fraudulent transactions and other financial misdeeds. It also accused the firm of using offshore companies in tax havens to manipulate share prices and financial results. The Hindenburg report also alleged non-compliance with disclose and shareholding laws.

Commenting on Hindenburg’s allegations, Gautam Adani told shareholders at the Annual General Meeting (AGM) for 2023 that the report was a combination of targeted misinformation aimed at damaging the conglomerate’s image.

He added the report, released before the company’s follow-on-public offer (FPO), was aimed at damaging Adani Group’s reputation and generating a profit by driving down its stock prices.

"The report by Hindenburg was a malicious attempt aimed at damaging Adani and the group's image. Subsequently, despite a fully subscribed FPO, we decided to return the money to investors to protect their interests," Adani said.

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