Adani gets clean chit from SC experts panel
Panel says Sebi probe drew blank, no regulatory failure
image for illustrative purpose
New Delhi: An expert committee appointed by the Supreme Court said it cannot conclude any regulatory failure around Adani Group's stock rallies, and that Sebi has "drawn a blank" in its probe into alleged violations in money flows from offshore entities into the conglomerate.
But the six-member panel said there was an evidence of a build-up in short positions on Adani Group stocks ahead of the report of US-based short seller Hindenburg Research, and profiting from squaring off positions after prices crashed post-publication of the damning allegations.
"At this stage, taking into account the explanations provided by Sebi, supported by empirical data, prima facie, it would not be possible for the committee to conclude that there has been a regulatory failure around the allegation of price manipulation," the panel said in the report submitted to the Supreme Court. It further said there is a need for an effective enforcement policy that is "coherent and consistent" with the legislative position adopted by Sebi.
According to the committee, it also cannot say that there has been a regulatory failure on Sebi's part on minimum public shareholding rules or on related party transactions. The apex court had appointed the committee parallel to the investigation that markets regulator Sebi was conducting into allegations against Adani Group and the plunge in the apples-to-port conglomerate's shares, triggered by Hindenburg's allegations.
The expert panel was headed by retired Supreme Court judge Justice AM Sapre and comprised OP Bhatt, KV Kamath, Nandan Nilekani and Somsekhar Sundaresan. "The foundation of Sebi's suspicion that led to investigations into the shareholding of the foreign portfolio investors (FPIs) in the Adani-listed companies is that their ownership structure is "opaque" because the ultimate chain of ownership above the 13 overseas entities holding Adani Group stocks is not clear," the report said.
Sebi has found 42 contributories to the assets under the management of the 13 overseas entities and has been pursuing various avenues to ascertain the same. "It has been a long-standing suspicion of Sebi that some of the public shareholders are not truly public shareholders and could be fronts for the promoters of these companies," it said.
Despite pursuing various routes through the Enforcement Directorate and the income-tax department, Sebi has not determined the ultimate ownership of these 13 entities. While the FPIs in question made declarations of the beneficial owner by identifying the natural persons controlling their decisions, a 2018 law had done away with the very requirement to disclose the last natural person owning any economic interest in the FPI. Sebi has been investigating the ownership of the 13 overseas entities since October 2020.
