Sebi seeks more time to probe Adani

The Securities and Exchange Board of India filed an application with the Supreme Court on Saturday, seeking a six-month extension to complete its probe into the allegations levelled by US-based short-seller Hindenburg against the Adani Group.

Sebi said it had studied 56 cases of short selling reports filed against companies in the US, and the time taken by the Securities Exchange Commission, which resulted into action against the said listed companies, ranged from nine months to five years, with an average time of two years.

Also read: Global Uncertainties – Will they fog the Indian growth story?

“Here, Sebi was given a mere two months and it is reasonable on its part to seek more time,” he added.

In March, the apex court had directed Sebi—which was already probing allegations against the Adani Group companies—to probe the allegations levelled by Hindenburg and specifically investigate if there was a violation of the minimum public shareholding norms in public limited companies, failure to disclose transactions with related parties and any manipulation of stock prices.

Sebi was told to conclude the investigation within two months and file a status report by May 2. The regulator was also asked to apprise a six-member expert committee of the action taken following the court’s directions. “It would be in the interest of justice that Sebi continues to give periodical reports to SC so that the latter can monitor this probe and it can be positively concluded within the specified period of time,” said Tushar Agarwal, advocate, Supreme Court of India.

He added that further extensions and delays could distort the real reason behind the entire Hindenburg-Adani episode due to various known and unknown extraneous influences.

In its application on Saturday, Sebi said the regulator had attended two meetings called by the committee in April, during which detailed presentations were made that included extensive data and supporting notes as well as data and analysis on the fresh set of queries received from the committee.

The regulator said it had formed a prima-facie view on some of the allegations levelled in the Hindenburg report, including 12 suspicious transactions for possible violations related to mis-representation of financials, possible violations with regard to related party transactions disclosures, violations related to corporate governance matters, minimum public shareholding norms in the context of FPI shareholding, possible stock price manipulation and trading in Adani Group stocks in the periods before and after the Hindenburg report as well as possible violation of ODI, FPI, short selling and insider trading norms.

Also read: How traders can optimise returns using liquid ETF

Sebi said on Saturday that probes into some of these violations would take more time. For instance, it said the examination relating to 12 suspicious transactions are complex and have many sub-transactions and a rigorous investigation of these transactions would require collation of data and information from various sources along with detailed analysis including verification of submissions made by the companies. This includes financial statements of listed and unlisted companies, offshore entities, disclosures filed with stock exchanges, minutes of board meetings, bank statements of the concerned entities, etc.

Sebi said the detailed investigation process would also include depositions from various key managerial personnel, statutory auditors and other relevant persons.