SEBI told the Supreme Court it has “substantially progressed” in its investigations. Here is what has happened in the Adani case ever since the Hindenburg Research report came out.
Sebi said the time for filing the report on Adani-Hindeburg row on conclusion of probe be extended by “15 days, or such other period as this Hon’ble Court may deem fit and necessary in the facts and circumstances of the present case”
The Securities and Exchange Board of India (SEBI) has filed an application in the Supreme Court seeking 15 more days to conclude its inquiry in the Adani-Hindenburg case. The regulator has said it has “substantially progressed” in its investigations.
Here is what has happened in the case so far
January 24: The US-based short seller Hindenburg Research publishes a 106-page report accusing the Adani Group of ‘brazen stock manipulation and accounting fraud’. Hindenburg flags concerns over the Group’s high leverage. The report comes out just a few days ahead of the opening up of the Rs 20,000-crore follow-on public offer (FPO) of Adani Enterprises Ltd (AEL). The FPO is to open for subscription on January 27 and close on January 31.
The shares of the listed companies of Adani Group come under heavy selling pressure on the stock exchanges after the Hindenburg report comes out.
January 26: The Adani Group issues a statement saying it is planning to sue Hindenburg Research for its “maliciously mischievous” report.
“The maliciously mischievous, unresearched report published by Hindenburg Research on January 24, 2023 has adversely affected the Adani Group, our shareholders and investors. The volatility in Indian stock markets created by the report is of great concern and has led to unwanted anguish for Indian citizens,” Adani Group says.
In response to the legal threat, Hindenberg Research says it stands by its report and believes that any legal action taken against it would be ‘meritless’.
January 31: Corporates and foreign investors bail out the Rs 20,000-crore FPO of Adani Enterprises amid the volatility in the stock market and crash in Adani Group shares.
Despite the market price of the AEL share quoting below the issue price, the FPO gets subscribed 1.12 times on the last day of the issue (January 31) in the wake of good response from qualified institutional buyers (QIBs), including foreign institutional investors (FIIs) and non-institutional investors (NIIs), comprising corporates. The QIB portion gets subscribed 1.26 times and NIIs 3.32 times. Corporates bid for 1.66 crore shares worth Rs 5,438 crore and FIIs applied for 1.24 crore shares worth Rs 4,127 crore.
February 1: One day after the AEL’s FPO closes for subscription, the Adani Group decides to call off the fully subscribed issue and return the money to the investors.
“Given these extraordinary circumstances, the company’s board felt that going ahead with the issue will not be morally correct. The interest of the investors is paramount and hence to insulate them from any potential financial losses, the board has decided not to go ahead with the FPO,” Adani said in a statement.
February 14: SEBI, in a note to the Supreme Court, says it is “already inquiring into both, the allegations made in the Hindenburg report as well as the market activity immediately preceding and post the publication of the report, to identify violations of SEBI Regulations…” including those related to short selling.
March 2: The Supreme Court on March 2 sets up an expert committee headed by its former judge Justice A M Sapre to investigate whether there was a regulatory failure in dealing with the alleged contravention of laws pertaining to the securities market by the Adani Group or other companies. The other members included KV Kamath (former CEO of ICICI Bank), OP Bhat (former SBI Chairman), Nandan Nilekani (Infosys Chairman), justice (retired) JP Devadhar, and Somasekhar Sundaresan, a lawyer with expertise in securities laws.
Separately, the Supreme Court asks the capital markets regulator SEBI – already probing allegations against Adani Group companies – to specifically investigate: i) if there has been a violation of the minimum public shareholding norms in public limited companies, ii) if there has been a failure to disclose transactions with related parties, and iii) if there was any manipulation of stock prices.
April 29: Citing “complexity of the matter” and the “interest of justice,” SEBI moves the Supreme Court seeking a six-month extension, “at least,” to complete its probe into allegations of fraud and stock manipulation made by the Hindenburg against the Adani Group.
“In respect of the investigation/examination relating to 12 suspicious transactions, prima facie it is noted that these transactions are complex and have many sub-transactions and a rigorous investigation of these transactions would require collation of data/information from various sources along with detailed analysis including verification of submissions made by the companies,” SEBI said in an application filed before the apex court.
May 15: SEBI informs the Supreme Court that it had not probed any Adani Group companies since 2016, as alleged by some of the petitioners.
This comes after one of the petitioners opposes the markets regulator’s application seeking six more months. The petitioner says that the markets regulator had been probing Adani since 2016.
May 17: The Supreme Court gives SEBI time till August 14 to complete its probe.
A bench presided by Chief Justice of India D Y Chandrachud also asks the markets regulator to submit an updated status report on the investigation. Fixing the matter for hearing next on July 11, the bench asks the expert committee to continue to assist the court. “The committee may hold further deliberations in the meantime,” it says.
May 19: The six-member expert committee says that the markets regulator “had drawn a blank” in its investigation into alleged violations in money flows from offshore entities into the conglomerate.
July 10: SEBI tells the Supreme Court that its 2019 rule changes do not make it tougher to identify beneficiaries of offshore funds, and action will be taken if any violation is found or established.
July 11: SEBI says that despite tightening norms to lift the veil around the ‘opaque structure’ of FPIs, the regulator has faced a wall since entities actually controlling FPIs are in jurisdictions which leave ambiguity around entities that have economic interest in FPIs, but no ostensible control.
August 14: SEBI asks the Supreme Court for a 15-day extension to complete its inquiry.
SEBI informed the Court that it “had sought information from agencies, regulators in foreign jurisdictions, etc. and upon receipt of such information, will evaluate the same to determine further course of action, if any…”
The Securities and Exchange Board of India (SEBI) Monday sought 15 more days from the Supreme Court to complete its probe into charges levelled by US-based research group Hindenburg against Adani Group companies.
Seeking more time, the market regulator which is investigating the matter pursuant to the order of the top court said the probe “has progressed substantially” and that it “has examined/investigated 24 matters” of which “17 are final and complete and approved by the Competent Authority in accordance with SEBI’s extant practice and procedures”.
SEBI informed the Court that it “had sought information from agencies, regulators in foreign jurisdictions, etc. and upon receipt of such information, will evaluate the same to determine further course of action, if any…”
The Board said “out of the remaining 6 matters. in 4 investigations/ examinations, findings have been crystalized and the reports prepared consequent thereto are in the process of approval by the Competent Authority” and that it “expects to complete the approval process in respect of the aforesaid 4 matters shortly and in any event before the next date of hearing, i.e., 29.08.2023.”
The application added that “in the remaining 2 matters, investigation is at an advanced stage in 1 matter and in the other 1 matter, interim report is under preparation based on information gathered by SEBI thus far.”
On March 2, 2023, the SC set up a six-member expert committee “to investigate if there was a regulatory failure in dealing with the alleged contravention of laws pertaining to the securities market in relation to the Adani Group or other companies.”
