28-Aug-2023
2 mins read
In a recent development, the Securities and Exchange Board of India (SEBI) has concluded its inquiry into the claims made against the Adani Group by Hindenburg Research this year. The investigation, initiated in January, examined a variety of accusations, such as manipulating stocks, engaging in transactions and financial impropriety. Gautam Adani, the founder of the Adani Group, has strongly denied these allegations. Portrayed them as an effort to damage the reputation of the group.
Adani Group’s Strong Reaction to Hindenburg Report
Gautam Adani has not mince his words when it comes to the Hindenburg report. He has labelled it a calculated and malicious endeavour, alleging that its intent was to artificially deflate the stock prices of Adani Group companies for short-term financial gains. Addressing shareholders during the annual general meeting of Adani Enterprises Ltd, Adani stressed that a considerable portion of the allegations pertained to a period already addressed by relevant authorities between 2004 and 2015. He expressed his belief that the group’s reputation would prevail against these unfounded claims.
SEBI’s Investigation Process
While the SEBI’s 15-page status report doesn’t explicitly disclose its findings, it offers insight into the regulatory body’s investigative process. The report touches on various aspects, including related party transactions. Notably, the inquiry focused on 12 foreign portfolio investors (FPIs) holding public shares in Adani Group companies. However, the challenge lay in identifying the true economic interests of shareholders due to entities connected to these investors operating in tax havens.
Awaiting Information from Offshore Jurisdictions
One of the report’s highlights is SEBI’s acknowledgement of its ongoing efforts to gather information from five different countries concerning these FPIs and their shareholders. The regulatory authority emphasised that the presence of entities in offshore tax jurisdictions complicated the process of determining the genuine stakeholders of these 12 FPIs. The report also revealed that an interim report had been endorsed by the relevant authority, specifically concerning the trading of Adani Group stocks, surrounding the release of the Hindenburg report.
Remaining Questions and Supreme Court Involvement
While SEBI has concluded its investigation into 22 out of the 24 matters it was probing, there remain lingering questions. The regulatory body has indicated that it is still awaiting information from five tax havens regarding the actual owners behind foreign investors who have invested in the Adani Group. This information is pivotal to closing the remaining aspects of the investigation. The Supreme Court has instructed SEBI to conduct an investigation into these allegations and report its findings to a committee consisting of experts.
Amidst these developments, the Adani Group’s share prices are in focus today. The allegations and subsequent investigation have undoubtedly left their mark on the conglomerate’s market performance, underscoring the significance of regulatory processes in maintaining market integrity. As SEBI continues to navigate the intricacies of international transactions and ownership structures, the financial world eagerly anticipates the final outcomes of this investigation.