Adani-Hindenburg: SC panel says can't pinpoint regulatory failure

In a briefing called by the committee, Sebi said it did not find any evidence of "wash trades" even after putting Adani group scrips under various surveillance measures

The Supreme Court’s six-member panel said that “prima facie it would not be possible to conclude if there has been a regulatory failure around the allegation of price manipulation in the Adani scrips,” in the Adani-Hindenburg case. It has recommended that all investigation be completed in a time-bound manner.

The expert committee, formed by the SC to look into regulatory issues following the Hindenburg report in the Adani case, had submitted it report to the apex court on May 6. The panel was given two months time to file a status report on March 2 in the case.

The Committee’s remit is not to examine whether the price rise in Adani stock was justified, it is to ascertain if there was a regulatory failure.  

In a briefing called by the committee, Sebi said it did not find any evidence of “wash trades” (where connected parties transact in a stock continually with one another without any intention to actually transfer ownership of the stock) even after putting Adani group scrips under various surveillance measures.

Committee is of view that Sebi indeed kept a watch in light of its concurrent probe into the suspicison about the minimum public shareholding, it stands to reason that “one cannot return a finding of a regulatory failure”.

Committee said that the regulator submitted that price movement of Adani stocks had been taken up by the stock exchanges at four occasion. Two of these were prior to Hindenburg Report and two were post the publication of the report (which after January 25).

Sebi found that there were some entities who took short positions before Hindenburg published its report and profited by squaring off their positions once the prices crashed.

The committee said that the market has 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," it said.

"The volatility in the Adani stocks was indeed high, which is attributable to the publication of the Hindenburg report and its consequences," the report said.

The apex Court on Wednesday granted Sebi time till August 14 to complete its probe into the allegations of stock price manipulation by the Adani group and asked the market regulator to place on record an updated status report of the probe. Sebi had sought an extension of six months till September 30.