The Supreme Court on Thursday ordered setting up of a six-member committee headed by former apex court judge Justice A M Sapre to investigate the recent Adani Group shares crash triggered by the Hindenburg Research’s fraud allegations and other regulatory aspects related to stock markets.
NEW DELHI:
India’s top court on Thursday asked the market regulator to investigate any possible lapses in securities law or other regulatory disclosures by the Adani group that has been hard by allegations of business malpractice by a U.S. short seller.
The Supreme Court of India also ordered the formation of an investor-protection panel amid sharp falls in the Adani group’s shares.
The ruling was announced by a three-judge bench, headed by Chief Justice of India D. Y. Chandrachud, which heard several public-interest litigations on losses investors suffered due to the stock market rout triggered by the Hindenburg report. Seven listed companies of the Adani group have lost about $135 billion in value since the report was published.
The Supreme Court on Thursday ordered setting up of a six-member committee headed by former apex court judge Justice A M Sapre to investigate the recent Adani Group shares crash triggered by the Hindenburg Research’s fraud allegations and other regulatory aspects related to stock markets.
The court asked the panel to submit its report in a sealed cover within two months.
The top court observed that the PILs pertained to “the loss of investors’ wealth over the past few weeks due to the steep decline of share prices of Adani group companies, precipitated by the Hindenburg Research report which alleged manipulations and malpractices by the Adani group companies” and also directed market regulator SEBI (Securities and Exchange Board of India) to complete its ongoing probe into the issue in two months and file a status report. Besides former apex court judge Justice Sapre, the other members of the court-appointed panel will be “O P Bhat (former Chairman of SBI), Justice J P Devadhar (retired judge of the Bombay High Court), K V Kamath, Nandan Nilekani, Somasekharan Sundaresan”.
Justice Chandrachud directed the Centre, financial statutory bodies and the SEBI chairperson to render all cooperation to the Justice Sapre panel which will have to submit its report in a sealed cover within two months in the court.
The remit of the Committee shall be to provide an overall assessment of the situation including the relevant causal factors which have led to the volatility in the securities market in the recent past, the court said.
The committee will “suggest measures to strengthen investor awareness and to investigate whether there has been a regulatory failure in dealing with the alleged contravention of laws pertaining to the securities market in relation to the Adani Group or other companies,” it said.
It will suggest measures to strengthen the statutory or regulatory framework, and secure compliance with the existing framework for the protection of investors, it said.
Indian markets regulator SEBI has been investigating a critical Jan. 24 report by Hindenburg Research that alleged the Adani group improperly used offshore tax havens and manipulated stocks.
The conglomerate has denied doing so. SEBI had previously told the court it was investigating the allegations made in the Hindenburg report and market activity immediately preceding and following its publication.
The Supreme Court asked SEBI to check “whether there has been a failure to disclose transactions with related parties” and “whether there was any manipulation of stock prices in contravention of existing laws”.
Billionaire Gautam Adani welcomed the Supreme Court order.
“It will bring finality in a time bound manner. Truth will prevail,” he said in a post on Twitter.
Hindenburg Research said in its report it had identified numerous “undisclosed related party transactions” by both listed and private Adani companies, allegedly in violation of Indian disclosure laws.