New Twist In Adani-Hindenburg Tale: SEBI Accused Of Protecting Group

The Securities and Exchange Board of India (SEBI) is being accused by public interest ligitgation petitioners of ignoring critical alerts from the Directorate of Revenue Intelligence (DRI) regarding alleged stock manipulation by the Adani Group.

What Happened: Four PILs on the Adani-Hindenburg controversy have been brought to the Supreme Court of India, including those by lawyers M L Sharma and Vishal Tiwari, Congress leader Jaya Thakur and law student Anamika Jaiswal.

Jaiswal, a law student, has alleged that SEBI ignored vital facts and overlooked DRI’s alert about potential stock manipulation by the Adani firms during its investigation.

According to the affidavit, the DRI had alerted the then SEBI chairperson in 2014 about the Adani Group’s potential involvement in stock market manipulation using money allegedly laundered via over-valued imported power equipment.

The affidavit also alleges a conflict of interest in SEBI’s investigation of the Adani case, citing connections between Cyril Shroff, Managing Partner of Cyril Amarchand Mangaldas and member of SEBI’s Committee on Corporate Governance, and the Adani family.

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Additionally, Jaiswal argues that SEBI’s frequent regulation and definition amendments have indirectly benefited the Adani Group, allowing their alleged regulatory violations and price manipulations to go unnoticed.

The affidavit comes in response to a Hindenburg Research report alleging accounting fraud, stock price manipulation, and tax haven misuse by the Adani Group, which caused a significant fall in the group’s market value.

Why It Matters: The allegations against SEBI are significant given the backdrop of the Adani Group’s ongoing controversies. A Hindenburg report in in January accused the group of financial irregularities. SEBI launched a probe into the allegations and reportedly found discrepancies in offshore fund holdings in August 2023.

In the same month, the Organized Crime and Corruption Reporting Project (OCCRP) levied further allegations against the Adani Group, stating that the conglomerate had investments in publicly traded stocks through opaque funds based in Mauritius. This caused a significant drop in the group’s stocks. However, the Adani Group vehemently denied these allegations, terming them as an attempt to revive the “meritless” Hindenburg report.

If established, these accusations against SEBI could raise questions about its regulatory role and effectiveness in preventing potential market manipulation and safeguarding investor interests.

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AI was used as a secondary aid in the writing of this article.

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Posted In: EquitiesGovernmentRegulationsMarketsAdani GroupHindenburgOCCRP