Dealings in shares of at least three Adani companies under Sebi lens

Regulator probes possible breach of laws related to insider trading

Capital markets regulator Securities and Exchange Board of India (Sebi) is scrutinising certain dealings in the shares of at least three Gautam Adani-led companies — Adani Power, Adani Green Energy and Ambuja Cements — for suspected breach of securities laws that relate to insider trading, according to two people familiar with the ongoing probe.

Earlier this month, Sebi raised queries regarding some unpublished price-sensitive information (UPSI) that might have been used for insider trading in the stocks of these companies, either to influence their prices or to make unfair gains, said one of the two people quoted above.

According to a preliminary probe, certain entities and individuals are suspected to have used their access to UPSI at different points in 2022. The regulator is learnt to have sought details and documents from the companies on “specific timeframes” when a misuse of UPSI is suspected. The queries are for the period between February and March-end for Adani Power, March and April-end for Adani Green Energy, and July and October for Ambuja. Possible triggers for these specific timelines, however, could not be ascertained.

Any communication of UPSI is an offence under Sebi’s Prohibition of Insider Trading Regulations, and individuals found to be trading on such information could be charged with insider trading. A detailed questionnaire sent to the Adani group last week remained unanswered despite multiple reminders. Sebi did not respond to Business Standard’s query on the issue.

The latest scrutiny is part of Sebi’s ongoing probe into the many allegations levelled against the Adani group by US-based short-seller Hindenburg Research in a report on January 24. Besides alleged insider-trading violations, the regulator is also probing possible related-party transactions, violation of minimum public shareholding norms, share-price manipulation, short-selling, and foreign portfolio regulations, among other things.

The Hindenburg report had alleged brazen accounting fraud and stock manipulation by the Gautam Adani-led group. The matter reached the Supreme Court (SC), which, in its March 2 order, gave Sebi two months to investigate the allegations. On April 29, the regulator sought six months and was given until August 14 to conclude its probe. Additionally, the court directed Sebi to provide a specific report on its investigation into the alleged violation of public-float norms by certain Adani group companies. Sebi rules require a publicly traded company to have a minimum public shareholding of 25 per cent.

The SC, which is scheduled to hear the matter again on July 11, is expected to take up the report submitted by a six-member panel which it had set up in March to look into regulatory failure and breach of laws. Notably, the expert panel, headed by retired SC judge A M Sapre, had found no conclusive evidence of price manipulation in the shares of Adani group companies.

“At this stage, taking into account the explanations provided by Sebi, supported by empirical data, prima facie, it would not be possible for the committee to conclude that there has been a regulatory failure around the allegation of price manipulation,” the panel had said. It had also stressed that while Sebi was actively collecting data on these transactions, it had to complete its investigation in a time-bound manner. The committee had highlighted that the market had re-priced and re-assessed the Adani stocks. "While they may not have returned to the pre-January 24 levels, they are stable at the newly re-priced level."