India’s Supreme Court appointed an expert panel to investigate if the country’s securities regulator failed to act on allegations against the Adani Group levelled by short seller Hindenburg Research.
The country’s top court on Wednesday directed the six-person panel to probe “regulatory failure in dealing with the alleged contravention of laws pertaining to the securities market in relation to the Adani Group”, according to the court order.
The Supreme Court asked the panel to provide “an overall assessment of the situation”, including assessing the causes of recent market volatility. The court ordered the panel to submit its findings within two months.
Adani stocks lost more than $145bn in a wipeout following the January release of the Hindenburg report, which accused Gautam Adani’s infrastructure group of stock manipulation and accounting fraud. Adani has denied the accusations.
Political pressure is mounting on the Securities and Exchange Board of India, with opposition politicians criticising the regulator for not doing enough to protect retail investors. Adani is widely regarded as being close to Prime Minister Narendra Modi and has publicly aligned his business with the government’s growth agenda.
Led by former Supreme Court judge Abhay Manohar Sapre, the six-person panel includes former State Bank of India chair OP Bhatt, Infosys chair Nandan Nilekani, veteran banker KV Kamath, lawyer Somasekhar Sundaresan and retired judge JP Devadhar.
The Supreme Court directed SEBI to broaden its probe into Adani and look into possible illegal stock price manipulation.
The top court also requested Sebi to probe alleged violations of rules connected to related party transactions and minimum stock market floats with listed Adani Group companies. Last month, global index provider MSCI changed its weightings for some Adani Group stocks after reviewing how many shares could be freely traded.
The bench asked SEBI to report on its process to the court and to finish its investigation within two months. However, the two-month timeframe is not necessarily binding because SEBI could request extensions.
Adani said he welcomed the Supreme Court’s order. “The Adani Group welcomes the order of the Hon’ble Supreme Court,” Adani tweeted on Thursday. “It will bring finality in a time bound manner. Truth will prevail.”
Senior supreme court advocate Sanjay Hegde cautioned that Supreme Court committees have had mixed results.
“There have been committees in the past that have done effective work and there have been others whose responses have been less than satisfactory,” Hegde said.
“In the Adani case, the committee consists of distinguished people, but not too many of them seem to have an intimate knowledge of stock market manipulations,” Hegde added.
“This committee is nothing like FDR’s appointment of Joseph Kennedy to the SEC to set things right after the Wall Street crash.” Kennedy, John F Kennedy’s father, was the SEC’s first chair in the 1930s.
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