SEBI to probe Adani Group over share price decline – Supreme Court

Supreme Court of India, while hearing petitions along with Vishal Tiwari Vs UOI & Oth. on dated 03/03/2023, related to the recent decline in the share price of Adani Group companies, directed SEBI to investigate whether there has been a violation of the Securities Contracts (Regulation) Rules 1957, failure to disclose transactions with related parties and relevant information, and manipulation of stock prices. SEBI was directed to conclude the investigation within two months and submit a status report.

Multiple petitions were filed related to the recent decline in the share price of Adani Group companies, which was triggered by a report by Hindenburg Research alleging violations of securities laws by the Adani Group. The petitions seek various directions and investigations related to the alleged violations and their impact on public institutions like SBI and LIC.

WP(C) No. 162 of 2023 seeks a committee headed by a retired judge to investigate the Hindenburg Research report.

WP(Crl) No. 39 of 2023 seeks an FIR against the founder of Hindenburg Research and associates for short selling and recovery of profits for investors.

WP(C) No. 201 of 2023 seeks an investigation by a Special Investigation Team or the CBI into allegations of fraud and the role of top officials of public sector banks and lender institutions.

WP(Crl) No. 57 of 2023 seeks investigations into Adani Group companies and the role of LIC and SBI under the supervision of a sitting judge.

In its order dated 10 February 2023, the Supreme Court of India noted the need to review existing regulatory mechanisms in the financial sector to protect Indian investors from market volatility. The Solicitor General was asked to seek instructions from the Union of India on the constitution and remit of an expert committee.

During the hearing, Mr. Prashant Bhushan and Mr. Tushar Mehta, representing the petitioners and the Union of India respectively, suggested the remit of the expert committee to be constituted. SEBI also provided a brief on existing statutory regimes, regulatory mechanisms, and frameworks for investor protection.

The Court directed SEBI to investigate whether there has been a violation of the Securities Contracts (Regulation) Rules 1957, failure to disclose transactions with related parties and relevant information, and manipulation of stock prices. SEBI was directed to conclude the investigation within two months and submit a status report.

The Court also constituted an expert committee headed by Justice Abhay Manohar Sapre, consisting of five members, to assess the regulatory framework and suggest measures to strengthen it. The committee was requested to investigate the causal factors leading to market volatility and suggest measures to strengthen investor awareness, secure compliance, and strengthen the statutory and regulatory framework.

All agencies of the Union Government were requested to cooperate with the committee, and expenses related to the committee's work were to be borne by the Union Government. The committee was requested to submit its report to the Court within two months in a sealed cover.

Vishal Tiwari Vs UOI & Oth.