Sebi Requests Six-Month Extension for Adani Probe, Calls Allegations ‘Factually Baseless’

Sebi Seeks Six-Month Extension for Adani Probe; Calls Claims of Investigating Since 2016 “Factually Baseless”

The Securities and Exchange Board of India (Sebi) has informed the Supreme Court that the allegations of investigating the Adani group since 2016 are “factually baseless.” Sebi has requested an additional six months to complete the court-ordered probe into the accusations of stock market manipulation and accounting fraud made by US short-seller Hindenburg Research in January of this year. The market regulator’s counter-affidavit was filed by Satyansh Maurya, a 22-year-old assistant manager at Sebi, making him possibly the youngest official to move an affidavit before the Supreme Court.

One of the public-interest petitioners, Anamika Jaiswal, who is seeking a probe into the Hindenburg allegations, claimed that Sebi had been investigating the Adani group since 2016 for stock market manipulation. Jaiswal’s affidavit questioned why Sebi couldn’t provide even a preliminary finding on an investigation that began in 2016. However, Sebi’s counter-affidavit clarified that the investigation referred to by Jaiswal has no connection to the issues arising from the Hindenburg Report. The investigation she referred to pertains to the issuance of Global Depository Receipts (GDRs) by 51 Indian listed companies, none of which belong to the Adani Group. Sebi emphasized that the allegation of investigating Adani since 2016 is factually baseless and that the reliance placed on the GDR investigation is misplaced.

Prashant Bhushan, Jaiswal’s advocate, mentioned that Jaiswal’s petition was based on a written reply made in Parliament on July 19, 2021, by the Union Minister of State for Finance, Pankaj Chaudhary. Bhushan highlighted that the minister’s statement acknowledged Sebi’s investigation into Adani group companies regarding compliance with Sebi regulations. Bhushan further pointed out that the Albula Investment Fund, Cresta Fund, and APMS Investment Fund, registered in Mauritius, collectively held shares worth over Rs 43,500 crore in Adani group companies.

Sebi’s counter-affidavit stated that the regulator had initiated investigations into alleged violations of the Minimum Public Shareholding (MPS) requirement without directly mentioning the Adani group, which faces MPS violation charges. The Supreme Court had directed Sebi on March 2 to investigate whether the Adani group had violated Rule 19A of the Securities Contracts (Regulation) Rules by surreptitiously controlling more than 75 percent of the shares of its public-listed companies. This manipulation of share prices in the market is in violation of the listing rules for private companies, which restricts promoters from holding more than 75 percent of the issued equity.

Sebi has requested a six-month extension for the probe deadline, which expired on May 2, citing the complexity of the investigations involving multiple countries. The bench of Chief Justice D.Y. Chandrachud and Justices P.S. Narasimha and J.B. Pardiwala had previously declined a six-month extension, urging Sebi to complete the probe promptly. The bench is expected to formally grant an extension of three months, as Sebi’s extension plea will be taken up on Tuesday.