Seven Gautam Adani Companies Receive SEBI Notices In Hindenburg Stock Manipulation Case, Conglomerate Downplays Impact: 'No Material Non-Compliance'

Seven companies under the Adani conglomerate, including its flagship, Adani Enterprises, have been served notices of regulatory violations by the market regulator, the Securities and Exchange Board of India (SEBI.)

What Happened: The notices were dispatched in response to allegations of improper use of tax havens and stock manipulation by Hindenburg Research in January 2023, Reuters reported Saturday. The Adani group, spearheaded by billionaire Gautam Adani, has refuted these claims.

Adani Enterprises revealed on Thursday that it had received two notices from SEBI in the first quarter of 2024, citing non-compliance with provisions for listed companies and violation of disclosure rules on some related-party transactions. The company refrained from providing further details on the alleged violations.

Other companies in the group, including Adani Green Energy, Adani Power, Adani Total Gas, Adani Energy Solutions, Adani Wilmar, and Adani Ports & SEZ, also received notices from SEBI in the first quarter, according to their separate filings to the exchanges this week.

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Depending on the severity of the allegations and subsequent culpability, such violations can lead to monetary penalties or a temporary ban from capital markets. The gravity of the current allegations against the Adani group companies remains uncertain.

In an exchange filing on Thursday, Adani Enterprises revealed that it received two show cause notices (SCN) from the market regulator concerning certain related party transactions.

“The management believes that there is no material consequential effect of above SCNs to relevant financial statements and no material non-compliance of applicable laws and regulations.”

Why It Matters: In 2023, activist short-seller Hindenburg Research published a report presenting allegations that Adani Group has been engaging in stock manipulation and accounting fraud over decades.

At the time, Hindenburg investigated the group and its subsidiaries for two years to conclude that Adani had amassed a net worth of roughly $120 billion (₹9,80,392 crore), largely through stock price appreciation in the group's seven key listed companies which have spiked an average of 819% in the last three years.

While Adani Group refuted claims, within a month of the report, which accused Adani of pulling the "largest con in corporate history", the group’s listed entities shed around $150 billion (₹12.41 lakh crore).

An earlier report revealed that SEBI had identified discrepancies with offshore funds linked to the Adani Group that had breached regulations. The regulator had found 12 offshore funds invested in Adani group companies that violated disclosure rules and exceeded investment limits.

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This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.

Photo courtesy: Wikimedia

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Posted In: NewsMarketsGeneralAdani GroupGautam AdaniHindenburg