Sebi likely to seek more time from Supreme Court in Adani Group case

Deadline to submit status report is May 2

The Securities and Exchange Board of India (Sebi) may file an extension plea before the Supreme Court in order to obtain more time to complete its probe into Hindenburg allegations against the Adani group, said two people in the know.

The deadline to submit the status report to the Supreme Court is May 2. The court, in its March 3 order, said Sebi shall “expeditiously conclude” the investigation within two months and file a status report.

In the same order, the court constituted a six-member expert panel and mandated it to investigate regulatory failure and suggest measures to strengthen investor awareness and furnish its report in sealed cover to the court within two months.

The court also directed Sebi to apprise the expert committee of the action it had taken in furtherance of its directions.

In accordance with the court order, Sebi’s report should focus on alleged violations of minimum public shareholding norms, failure to disclose related-party transactions, and stock price manipulation.

“Sebi’s legal team may move the application for extension because the deadline for submitting the status report ends in the next few days,” said a source. 

“Given the complexities involved, a thorough probe and examination report would require more time,” added the source.

Without divulging more detail, the person said the market regulator might apprise the court about the progress in the matter and the rationale behind seeking more time. A query sent to Sebi on the matter remained unanswered until press time.

“Vital information with respect to the offshore entities of the Adani group is not fully onboard. This information and related data are crucial pieces of the probe. So regulators may seek some extra time to ensure that the findings are accurate and in line with the terms of reference prescribed by the apex court,” said another regulatory source.

The six-member panel, headed by former Supreme Court judge Justice A M Sapre, is learnt to have visited the Sebi headquarters earlier this week.

“They were apprised of the progress in the case and feedback was taken,” a source quoted above said.

Sebi has been working relentlessly on the matter. The case involves seeking information from other regulatory bodies both in India and abroad.

“Getting information around the ultimate beneficial ownership of overseas funds from foreign jurisdiction as well as custodians is proving to be more complex than earlier envisaged,” said one person privy to the development.

Sources said the market regulator had been seeking a barrage of information from the Adani group and market intermediaries for the past two weeks.

The information pertains to related-party transactions done by the 10 listed and unlisted firms belonging to the power-to-port conglomerate. Also, details have been sought on the shareholding patterns, disclosures and other information to corroborate the group’s published numbers and claims, people familiar with the matter said.

Two separate teams are on the matter to look at alleged manipulation in Adani group shares, along with market movements before and after the publication of the report. The regulator is also cross-checking the data it collated from different sources, including stock exchanges, custodians, credit-rating agencies, and banks, people cited above said.

The court-appointed committee comprises O P Bhatt, Justice J P Devadhar, K V Kamath, Nandan Nilekani, and Somasekharan Sundaresan. The panel has also been tasked with suggesting measures to strengthen the regulatory framework and investor awareness.

Case file

• US-based short seller Hindenburg Research released its report on Adani group on Jan. 24
• Two PILs filed in SC, seeking probe in the matter
• Top court also asked Sebi to submit its status report by May 2
• Sebi was told to look into the alleged violation of minimum public shareholding norms, manipulation of stock prices, etc