The New Delhi briefing to the panel by Securities and Exchange Board of India (Sebi) chairperson Madhabi Puri Buch was her first, and an important one, said these people. Henceforth, she will not appear before the committee unless required.
Sebi will, however, continue to provide all requisite information to the six-member committee, which is simultaneously carrying out its own investigation in the case and will furnish its report to the Supreme Court, they said.
The presentation covered disclosures on related party transactions by both listed and privately held Adani Group companies. Other issues pertaining to the group – such as offshore companies, foreign portfolio investor holdings and minimum stock market floats – were also covered in the meeting.
Stock Exchange Data
Buch briefed the panel on its policy for regulated short-selling (which was introduced by Sebi in 2007) and on policies followed in major international jurisdictions.
Sebi has collected data from stock exchanges on buyers and sellers of Adani Group companies’ shares before and after the Hindenburg report, to examine if there was any cartel behind the extreme stock price movement.
Hindenburg Research, in its report, revealed that it had taken short positions in Adani Group companies through US-traded bonds and non-Indian traded derivative instruments.
The Sebi chief touched upon the regulator’s existing investor protection mechanisms and what could be done to further strengthen them.
According to the sources cited above, Buch has formed a core team to investigate Adani Group for any lapses relating to the securities market, as well as the market activity “preceding and post the publication of the Hindenburg Research report.” This team will provide the required assistance to the committee. The markets regulator hopes to conclude its investigation and submit its findings to the court-appointed committee within two months.
Sebi did not respond to an email query till the time of going to press.
The committee set up by the apex court has to examine and suggest steps to strengthen India’s investor protection regulatory framework following the crash in Adani Group stocks in the wake of the Hindenburg report that accused the conglomerate of “stock price manipulation” and “accounting fraud.”
The panel is headed by former Supreme Court judge AM Sapre and consists of former bankers KV Kamath and OP Bhatt, Infosys cofounder Nandan Nilekani, securities lawyer Somasekhar Sundaresan and retired high court judge JP Devadhar.
Since January 25, Adani Group companies have lost $125 billion in market value despite the conglomerate denying the allegations. Adani Group chairman Gautam Adani has welcomed the probe panel.
Sebi has been under pressure to investigate the group, with opposition parties criticising the regulator for not doing enough to protect the interest of investors. Subsequently, a batch of public interest litigations was filed in the matter before the Supreme Court.
Hindenburg alleged that the Ahmedabad-based conglomerate improperly used offshore entities in tax havens to hold shares of its companies’ stock, thereby manipulating share prices and violating Sebi’s rules on public shareholdings.
Buch, in the Sebi press conference held after its board meeting on Wednesday, said the Adani Group matter is an “elephant in the room.”