New Delhi: The Securities and Exchange Board of India (SEBI) on Saturday (April 29) filed an application before the Supreme Court, seeking six-month extension to complete its probe into the Hindenburg allegations of "stock manipulation" by the Adani Group. SEBI in its application has stated that “it would take further time to arrive at verified findings and conclude the investigation.”
The Hindenburg Research has made a litany of allegations, including fraudulent transactions and share-price manipulation, against the business conglomerate. However, the Adani group has dismissed the charges as lies, saying it complies with all laws and disclosure requirements.
‘SEBI would take at least 15 months…’
"Applicant/SEBI most respectfully submits that keeping in view the forgoing circumstances, it would take further time to arrive at verified findings and conclude the investigation... for ascertaining possible violations related to mis-representation of financials, circumvention of regulations and/or fraudulent nature of transactions in respect of 12 suspicious transactions... given the complexity of the matter, SEBI in the normal course would take at least 15 months for completion of the investigation of these transactions, but is making all reasonable endeavours to conclude the same within six months,” SEBI, in an application moved in the apex court, said.
SEBI further submitted that in order to conduct a proper investigation and arrive at verified findings, it would be just, expedient and in the interest of justice that the apex court extends time to conclude the investigations by at least six months.
SC deadline to SEBI
The apex court, in an order passed on March 2, had set a deadline to submit a status report on May 2, while asking SEBI to expeditiously conclude the investigation and file a status report.
SEBI said that replies and documents or information received from the companies would require reconfirmation and reconciliation, as well as independent verification. "The applicant/SEBI also respectfully submits that in respect of the investigation/examination relating to 12 suspicious transactions, prima facie it is noted that these transactions are complex and have many sub-transactions and a rigorous investigation of these transactions would require collation of data/information from various sources along with detailed analysis, including verification of submissions made by the companies," the application said.
‘This analysis would include detailed examination’
It also said that this analysis would include detailed examination of the following: Financial statements of listed entities and unlisted entities; financial statements of offshore entities involved in the transactions; disclosures filed with the stock exchanges including annual reports, balance sheets, quarterly financial statements and other event-based disclosures; minutes of the meetings of their board of directors and audit committee, wherever applicable; bank statements of the concerned entities for the relevant period (the allegations span over a 10 year period); connections/relations are amongst entities, both domestic and overseas; and, contracts and agreements, if any, entered between the entities along with other supporting documents.
"The applicant/SEBI further submits that this process of seeking bank statements from the offshore banks would entail taking assistance from offshore regulators, which may be time consuming and challenging. The applicant/SEBI submits that only thereafter, analysis would have to be conducted for the voluminous bank statements," said the application.
SEBI said that as is the case in most investigations, every layer of information received often leads to further layers of information that are required, sought, obtained and analysed and this process is particularly time consuming where there is a complex web of transactions.
SC constituted expert committee
In its order passed on March 2, the Supreme Court had announced an expert committee to examine India's investor protection framework in response to petitions following the crash in Adani Group securities against the backdrop of the Hindenburg Research report released in January. The Adani Group had rejected the report.
"In order to protect Indian investors against volatility of the kind which has been witnessed in the recent past, we are of the view that it is appropriate to constitute an expert committee for the assessment of the extant regulatory framework and for making recommendations to strengthen it. We hereby constitute a committee consisting of the following members: O.P. Bhatt, Justice J.P. Devadhar (retired), K.V. Kamath, Nandan Nilekani, and Somashekhar Sundaresan,” the Supreme Court had said.
Adani Group issues statement after SEBI moves Supreme Court
An Adani group spokesperson said that SEBI is conducting an investigation into allegations made by a foreign short-seller on 25 January 2023 and also into market activity before and after that date. We understand that SEBI has approached the Supreme Court for more time to conclude its investigation.
“We have welcomed the investigation, which represents a fair opportunity for everyone to be heard and for all issues to be addressed. We are fully compliant with all laws, rules and regulations and are confident that truth will prevail. We are fully cooperating with SEBI and will continue to provide all our support and cooperation," Adani Group said in a statement
“It is pertinent to note that in the SEBI application filed before the Hon’ble Supreme Court, there are no conclusions of any alleged wrong-doing. The SEBI application only cites the allegations made in the short-sellers report, which are still under investigation,” it added.
Congress says an attempt to bury 'scam'
Congress expressed apprehension over the SEBI's six-month extension request to probe the alleged stock market manipulation of Adani group shares, saying it hopes it was not an effort to bury the "scam. AICC general secretary Jairam Ramesh said the Securities and Exchange Board of India has asked for a six-month extension after the Supreme Court Committee ordered it to examine the stock market transactions of the Adani Group.
"Hope this request by SEBI is not an effort to bury the scam or drag it out in the hope that the furore will die down," Ramesh said on Twitter.
'This is a joke'
Trinamool Congress MP Mahua Moitra in her turn termed the move a joke. "This is a joke. SEBI has been investigating since October 2021 when they replied to my letter of July. While they prima facie see violations (no surprise)- they want 6 months to protect their favourite businessman so that he can get maximum time to cover up.
(With IANS inputs)
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