SEBI Accused of Suppression and Inaction in Adani Stock Manipulation Probe

SEBI Accused of Suppression and Inaction in Adani Stock Manipulation Probe
SEBI Accused of Suppression and Inaction in Adani Stock Manipulation Probe
SEBI Accused of Suppression and Inaction in Adani Stock Manipulation Probe
SEBI Accused of Suppression and Inaction in Adani Stock Manipulation Probe

SEBI Accused of Suppression and Inaction in Adani Stock Manipulation Probe

SEBI Accused of Suppression and Inaction in Adani Stock Manipulation Probe. Image/ PTI

New Delhi, September 11, 2023: In a new development in the Adani-Hindenburg controversy, one of the PIL petitioners in the case has accused the Securities and Exchange Board of India (SEBI) of suppressing important facts from the Supreme Court and failing to act on Directorate of Revenue Intelligence’s (DRI) letter regarding alleged stock manipulation by Adani companies.

PILs in the Adani-Hindenburg Row

The Supreme Court is currently handling four Public Interest Litigations (PILs) related to the Adani-Hindenburg controversy. These PILs were filed by lawyers M L Sharma and Vishal Tiwari, Congress leader Jaya Thakur, and law student Anamika Jaiswal.

SEBI’s Investigation and Allegations

On August 25, SEBI informed the Supreme Court that it had completed its probe into most allegations against the Adani group but was still awaiting information from tax havens regarding the true owners of foreign entities that had invested in the conglomerate.

In her affidavit, Anamika Jaiswal alleges that while SEBI was investigating the Adani group for over-invoicing, the DRI alerted SEBI in 2014 that the group might be involved in stock market manipulation using funds allegedly siphoned off through over-valuation in the import of power equipment. The DRI’s letter was accompanied by a CD containing evidence of siphoning off Rs 2,323 crore.

Jaiswal’s affidavit claims that SEBI suppressed these important facts and failed to act on the DRI’s alerts. It also highlights a potential conflict of interest, as Cyril Shroff, Managing Partner of Cyril Amarchand Mangaldas, has been a member of SEBI’s Committee on Corporate Governance and has familial ties to Gautam Adani’s family.

The affidavit points out that five of SEBI’s 24 investigation reports concern insider trading allegations against Adani group companies.

Unearthed Documents and Regulatory Amendments

Jaiswal’s affidavit references documents uncovered during an investigation by the ‘Organized Crime and Corruption Reporting Project.’ It notes that two Mauritius-based companies, Emerging India Focus Fund (EIFF) and the EM Resurgent Fund (EMRF), invested in and traded a significant volume of shares in four Adani companies between 2013 and 2018. However, SEBI has been unable to trace their ultimate beneficial owners.

The petitioner alleges that SEBI made frequent amendments to regulations and definitions that benefited the Adani Group, shielding them from regulatory contraventions and price manipulations.

Background and Investigations

The controversy began with a report by Hindenburg Research on January 24, alleging accounting fraud, stock price manipulation, and improper use of tax havens by the Adani group. This led to a significant drop in the Adani group’s shares’ market value.

In response, the Supreme Court directed SEBI to investigate the allegations. A separate expert panel was formed in March to examine the regulatory aspects of the allegations, concluding in May that SEBI’s investigation had been fruitless.

SEBI was initially given a deadline of August 14 to complete its probe, but it requested a 15-day extension, ultimately submitting a status report on its investigation.

Throughout the controversy, the Adani group has vehemently denied all allegations.

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