Adani Group faces regulatory scrutiny in US; stocks plunge
What's the story
Adani Group seems to have landed in troubled waters again. According to Bloomberg, US regulatory authorities are looking into the representations made by the Indian conglomerate to its US investors after the scathing report by Hindenburg Research. The stocks of Adani Group's listed companies took a beating on Dalal Street following the report. The conglomerate has denied knowledge of any probe in the US.
Context
Why does this story matter?
Adani Group has been under intense scrutiny since the turn of 2023. The Hindenburg report accusing the conglomerate of stock manipulation with the help of offshore companies and accounting fraud has proved to be near-fatal. However, things have been returning to normal for the group for the last couple of months. A US regulatory probe could derail its progress.
US authorities
US Attorney's Office and SEC are reportedly probing Adani Group
Per the report, the US Attorney's Office in Brooklyn, New York, and the Securities and Exchange Commission (SEC) are investigating Adani Group. The Attorney's Office sent inquiries to the conglomerate's largest institutional investors in the US. The inquiries were focused on what the group told investors in the wake of the Hindenburg report. The SEC is also probing the same matter, the report added.
Information
Not aware of any subpoenas to investors: Adani Group
Meanwhile, Adani Group said it is not aware of US authorities issuing subpoenas to its investors. "Our various issuers' groups remain confident that the disclosures are full and complete as disclosed in the relevant issuer offering circulars," an Adani Group spokesperson told Bloomberg.
Stocks
Multiple Adani stocks took a beating on Dalal Street
Multiple Adani stocks were affected by the report. The conglomerate's flagship Adani Enterprises fell 7.02% to Rs. 2,229 on NSE today. Shares of Adani Transmission and Adani Power declined by over 5%, while Adani Ports saw a 4.44% fall. Adani Wilmar's shares plunged by over 3%, while Adani Total Gas and Adani Green Energy fell by over 2%.
Meaning
Probe by US authorities may affect investor confidence
The investigation by US authorities may not lead to anything. They often open inquiries into companies that don't result in any action. The requests for information don't mean civil or criminal proceedings will start later. However, for Adani Group, it's all about optics. The conglomerate is already being probed by Indian authorities. A parallel US investigation would affect investor confidence.