Adani-Hindenburg Issue : 6 Months More Needed For Conclusive Findings On Prima Facie Violations, SEBI Tells Supreme Court

The Securities and Exchange Board of India has files application in the Supreme Court seeking a six-month extension to complete its probe into allegations made by US-based short seller firm Hindenburg Research against Adani group companies about stock price manipulations.

On March 2, the Supreme Court had directed the SEBI to complete the investigation into the Adani-Hindenburg report and submit a status report within a period of two months. As the deadline given by the Court is set to end on May 2, the SEBI has sought further period of six months in view of the complexity of the matter. It said that at least 15 months might be needed to complete the investigation, given the complex nature of transactions, but added that it will "reasonable endeavours" to complete the same within six months.

The market regulator said that in respect of the investigation relating to 12 suspicious transactions, those are prima facie complex and have many sub-transactions and a rigorous investigation of these transactions would require collation of data/information from various sources along with detailed analysis including verification of submissions made by the companies.

The SEBI said that examinations/investigations for which further time would be required would fall into three broad categories :

(i) Those where prima facie violations have been found and a period of 6 months would be required to arrive at conclusive finding.

(ii) Those where prima facie violations have not been found, a period of 6 months would be required to revalidate the analysis and arrive at conclusive finding.

(iii) In cases where, further examination/investigation is required and most of the data that is required for this purpose is expected to be reasonably accessible, a conclusive finding is expected to be arrived at in 6 months. 

In its direction, a bench led by Chief Justice of India DY Chandrachud had ordered that as a part of the ongoing investigation, SEBI shall also investigate :

(a) Whether there is a violation of Rule 19A of the Securities Contract Regulation Rules;

(b) Whether there is a failure to disclose transactions with related parties and other relevant information which concerns related parties to the SEBI in accordance with law;

(c) Whether there was any manipulation of stock prices in contravention of existing laws.

The Court also constituted an expert committee to review the regulatory mechanism in the light of Adani-Hindenburg issue. SEBI was also directed to cooperate with the committee.

In the application, SEBI has said that it has attended two meetings with the expert committee in April.