SEBI probing Hindenburg allegations on Adani Group: Centre tells SC
What's the story
Market regulator Securities Exchange Board of India (SEBI) is looking into Hindenburg Research's fraud and stock manipulation allegations against Adani Group, Solicitor General Tushar Mehta informed the Supreme Court on Monday. The Centre also agreed to the top court's proposal to form a committee of experts to suggest improvements to plug loopholes in regulations to prevent losses to common investors due to market volatility.
Context
Why does this story matter?
US-based short seller Hindenburg Research accused Adani Group companies of putting people's investments at risk. The government-owned Life Insurance Corporation (LIC) and State Bank of India (SBI) are exposed to Gautam Adani's conglomerate, which experienced a sharp decline in stock value, wiping out billions. The Opposition and the public have demanded a response from the government, which has mostly kept mum since the report.
SEBI
No significant impact at systemic level: SEBI
Mehta submitted a note to the SC where the SEBI said it was probing the market activity before and after Hindenburg's report to identify norm violations. The SEBI is using its powers under three regulations controlling offshore derivative instruments and short selling. The petitions in the SC relate to price fluctuations of a particular conglomerate that didn't have a significant market-wide impact, it said.
Note
Matter in early stages, inappropriate to discuss ongoing proceedings
The note submitted to the SC said, "SEBI is already enquiring into both, the allegations made in the Hindenburg report as well as the market activity immediately preceding and post the publication of the report, to identify violations of SEBI Regulation." "As the matter is in early stages...it may not be appropriate to list details about the ongoing proceedings at this stage."
Committee
Centre proposes suggesting names for review committee
On the SC's remark about the constitution of a committee to check the SEBI's regulatory regime, Mehta said a statutory body requiring monitoring by an SC-appointed committee could unintentionally discourage investors. Although he sought the remit of the committee, he requested permission to suggest names for the committee in a sealed cover, saying it would be inappropriate to discuss it in open court proceedings.
Adani
Balance sheet of all companies very healthy: Adani
Meanwhile, in an attempt to reassure investors, Adani Group has said it has strong cash flows and secure assets, and the balance sheet of all its companies was "very healthy." The group's stocks continued to decline on Monday, with the conglomerate losing around $120 billion since the publication of Hindenburg's report. It rebutted reports of halving revenue growth targets and scaling down capital spending.