Adani-Hindenburg Case: Supreme Court Seeks Update On SEBI Probe, Defers Hearing To Aug. 29

The expert committee has highlighted that SEBI's investigation will not reach anywhere given the changes made by it to the regulations pertaining to opaque structures and related-party transaction norms, Senior Advocate Prashant Bhushan told the Supreme Court.

Bhushan's comments on Tuesday were in the context of the committee's observation that the regulator was experiencing difficulties in identifying the economic ownership of foreign investors, partly because it had repealed the 2014 regulations on opaque structures.

In its affidavit submitted on July 10, the Securities and Exchange Board of India clarified that the reference to 'opaque structures' was rendered redundant since a new requirement of disclosure of beneficial ownership of foreign portfolio investors was introduced in 2018. The regulator has added that the 2019 amendments have effectively tightened the disclosure requirement related to beneficial owners.

Appearing for the markets regulator, Solicitor General Tushar Mehta informed the court that all these details have been mentioned in its response. He requested that the court set another date to continue the hearing.

Agreeing with the solicitor's proposal, the Chief Justice of India said that the court needs an opportunity to look at SEBI's affidavit. The CJI also said that the bench would like to know what circumstances led to changes in regulations on 'opaque structures' and 'beneficial ownership' definitions.

Mehta assured the bench that SEBI's investigation "is going on with full speed".

The next hearing in the case will be held on Aug. 29.

The Adani Group-Hindenburg Research matter began when the U.S.-based short seller released a report earlier this year alleging stock manipulation, accounting fraud, and corporate governance lapses by the conglomerate.

In this backdrop, multiple public interest litigations reached the Supreme Court, asking for directions regarding allegations against the Adani Group.

On March 2, the Supreme Court directed SEBI to investigate whether there had been any disclosure failures and if there had been any manipulation of Adani stock prices in contravention of existing laws.

The regulator was directed to submit its report within two months. However, in April, SEBI made submissions before the apex court, asking for six months to conclude its investigation.

The Supreme Court had also set up an independent committee headed by Justice (retired) Abhay Manohar Sapre. Other members of the committee included OP Bhat, KV Kamath, Nandan Nilekani, Somashekhar Sundaresan, and retired Justice JP Devadhar.

The committee was directed to provide an overall assessment of the situation, including the causal factors that had led to volatility in the securities market in the recent past.

The committee had submitted its report to the court, and subsequently, the court had made the report available to the parties on May 17.

On SEBI's time extension plea, the apex court gave the regulator time till Aug. 14 to update it on the course of the investigation.