India’s market regulator has completed the investigation into whether Adani Group companies violated securities laws, it said in a submission to the Supreme Court on Friday. It has investigated 24 transactions – findings in 22 of them are final in nature, it said. The status report provides a detailed breakdown of the steps taken by the Securities and Exchange Board of India (Sebi) during its investigation but does not reveal specific findings.
The regulator said it would take “appropriate action based on the outcome of the investigations in accordance with law”.
The apex court is scheduled to hear the matter on August 29.
The Supreme Court had directed Sebi to submit its status report on the investigation into the allegations made against the Adani Group by short-seller Hindenburg Research in its January report. The report accused the group of fraud and manipulation, allegations that Adani has rejected.
Sebi carried out 13 investigations into related-party transactions. The regulator also inquired into five cases linked to possible violation of insider trading rules.
Steps taken by Sebi
It probed two cases on stock price manipulation and one each on minimum public holding norm, foreign portfolio investors, the takeover code and trading before and after the Hindenburg report release.
The scope of the investigation on related-party transactions was to ascertain allegations relating to possible material misrepresentation in financial statements, misstatements, attempts to circumvent regulations and fraudulent transactions, if any, under various Sebi rules, it said.
The regulator scanned over 33,000 pages of documents, issued 90 summonses for personal appearance and issued over 1,000 emails to probe related-party transactions for the period from April 1, 2005, to March 31, 2023. It examined transactions entered into by Adani Power, Adani Enterprises, Adani Infra (India), Adani Mining and Adani Estates among others.
On the alleged violation of minimum public holding norms, Sebi’s investigation covered 13 overseas entities classified as public shareholders in Adani Group companies. The probe covered the period between April 1,2016, and September 30, 2020.
As many of the entities linked to these foreign investors are located in tax havens, establishing the economic interest of shareholders of the 12 foreign portfolio investors remains a challenge, the regulator said.
It said efforts are still being made to gather details from five foreign jurisdictions. The regulator has issued 90 letters seeking assistance from external agencies, issued 100 summonses for production of documents and examined about 12,000 pages of documents.
Sebi also examined whether there was insider trading in the shares of Adani Power, Ambuja Cements and Adani Green Energy between January 28, 2021, and October 15, 2022.
It scanned about 9,500 pages of documents and issued about 100 summonses for personal appearance and recorded 90 statements on oath in the insider trading matter.
The regulator said it carried out a holistic analysis in relation to alleged price volume manipulation in seven Adani Group stocks, including Adani Enterprises, Adani Ports & SEZ, Adani Green Energy, Adani Transmission, Adani Power, Adani Total Gas and Adani Wilmar.
It analysed trading by three clusters of foreign portfolio investors (FPIs) in the seven Adani Group stocks between March 1, 2020, and December 31, 2022.
The regulator also looked into allegations of manipulative trades by foreign entities mentioned in the Hindenburg report.
Sebi also examined whether the short positions taken by certain entities in Adani Group companies were unusual around the time the report was released. The period covered in this instance was January 18, 2023, to January 31, 2023.
