SEBI submits status report in Adani-Hindenburg case, to be heard in Supreme Court on August 29

SEBI informed the Supreme Court on Friday that it has completed the investigation into all allegations except two against the Adani Group. Still, SEBI is awaiting information from five tax havens about the actual owners of foreign investors.

SEBI has said in a status report to the Supreme Court that out of 24 cases it is probing, its findings are final in 22. Without disclosing the outcome of its probe, SEBI detailed the steps taken during its probe including Related Party Transactions. The regulator has said in the filing that SEBI will take appropriate action based on the outcome of the investigation as per law.

SEBI in its probe report said it is looking into allegations of manipulation of stock prices, alleged failure to disclose transactions, and possible violations of insider trading in certain shares of the group.

SEBI said it is probing 13 foreign entities (12 foreign portfolio investors and one foreign entity) for alleged non-compliance with the minimum public shareholding requirement by investing in their own companies through foreign proxies.

These 13 were classified as public shareholders of Adani Group companies. At the same time, some of these are said to be run by Vinod Adani, a close associate or the elder brother of group chairman Gautam Adani, in the American short-seller Hindenburg Research. SEBI said that since many entities linked to these foreign investors are located in tax haven jurisdictions. Because of this, it remains a challenge to establish the economic stakeholder shareholders of the 12 FPIs. Apart from this, SEBI said that this investigation report is interim.

According to SEBI, listed companies will have to maintain a minimum public shareholding of at least 25 percent. SEBI also said that an interim report has been approved by the competent authority with regard to trading in the shares of Adani Group before and after the release of the Hindenburg report. For this, information is being actively sought from external agencies/institutions. The SEBI interim report was approved by the competent authority on 24 August.

A January 24 report by Hindenburg Research had accused the Adani Group of fraud, stock price manipulation, and improper use of tax havens. After this report, there was a huge fall in the shares of Adani Group. Along with this, the stock market also declined. However, Adani Group has denied all the allegations.

The Supreme Court has ordered SEBI to look into the allegations and submit its findings. A separate six-member expert panel was constituted in March to look into the regulatory aspects of the allegations. It consisted of a retired judge and a seasoned banker. In May this year, the panel had said that Sebi has not come to any conclusion in its probe so far and its ongoing investigation in the matter is a "journey without destination".

Subsequently, the Supreme Court set a deadline of August 14 for SEBI to complete its investigation and submit its report. The regulator sought an extension of 15 days to complete the probe. Now SEBI has submitted a status report on its investigation. SEBI had earlier identified 13 specific deals.