India’s market regulator, the Securities and Exchange Board of India (SEBI), has approached the Supreme Court requesting a six-month extension to complete its investigation into allegations of stock price manipulation by the Adani Group and any lapses in regulatory disclosures. This comes after a US short seller’s report wiped out over $140 billion of the conglomerate’s market value, prompting the court to order SEBI to investigate the matter within two months and set up a panel to examine the protection of Indian investors.
In its application to the court, SEBI stated that it would take six more months to complete the exercise of ascertaining potential violations related to misrepresentation of financials, circumvention of regulations, and fraudulent nature of transactions.
The Adani Group, which has interests in power, infrastructure, ports, and other sectors, has denied any wrongdoing and accused the US short seller of making unsubstantiated claims. The allegations relate to the group’s companies Adani Ports and Special Economic Zone Ltd. (APSEZ) and Adani Enterprises Ltd. (AEL).
SEBI has already conducted a preliminary examination of the matter and requested information from APSEZ and AEL, as well as their promoters, including the Adani family, and related entities. The regulator has also sought information from several foreign entities, including Singapore-based Albula Investment Fund and Cresta Fund, which are said to have invested in Adani group firms.
SEBI’s investigation is focused on potential violations of disclosure norms and insider trading rules, as well as other regulatory lapses. The regulator is also examining the possible role of entities associated with the Adani Group in the alleged manipulation of share prices.
The Adani Group’s market value has been under pressure since the US short seller’s report was published in early June. The report alleged that the group had inflated the value of its foreign portfolio investments, routed money to tax havens, and used shell companies to evade taxes. The report also questioned the group’s corporate governance practices and raised concerns about its ability to service its debt.
The Adani Group has consistently denied the allegations and accused the short seller of spreading false information to manipulate the market. The group has also pointed out that it is one of India’s largest employers and has a significant presence in sectors critical to the country’s economic growth.
The Supreme Court’s intervention in the matter came after a public interest litigation (PIL) was filed seeking an investigation into the allegations against the Adani Group. The court ordered SEBI to investigate the matter and report back within two months.
SEBI’s request for an extension of six months suggests that the investigation is complex and requires more time to complete. The regulator’s findings will be closely watched by investors, regulators, and other stakeholders, as they could have implications for the Adani Group’s reputation and its ability to raise funds in the future.