What is the Supreme Court’s decision on the Adani Hindenberg saga?
The Supreme Court of India has formed a five-member expert committee headed by former apex court judge, Justice Abhay Manohar Sapre, to investigate the causal factors and existence, if any, of regulatory failure which led to investors losing crores due to the volatility in the securities market following Hindenburg Research’s report accusing the Adani Group of manipulation of share prices and account fraud. The committee includes former chairman of the State Bank of India O.P. Bhatt, retired Bombay High Court judge Justice J.P. Devadhar, former chief of the New Development Bank of BRIC countries K.V. Kamath, co-founder of Infosys Nandan Nilekani and securities expert and lawyer Somasekhar Sundaresan.
The remit of the committee is to provide an overall assessment of the situation, investigate whether there has been a regulatory failure in dealing with the alleged contravention of laws protecting the securities market in relation to the Adani Group of companies, suggest measures to strengthen Indian investor awareness, suggest measures to strengthen the statutory and regulatory framework and secure compliance with the existing framework for the protection of investors. The expert committee has been requested to submit its report to the Supreme Court in a sealed cover expeditiously within two months.
The court also directed the market regulator Securities and Exchange Board of India (SEBI) to complete its investigation into the allegations in the Hindenburg report against the Adani Group within two months and to keep the apex court-appointed expert committee apprised of its investigation. The court highlighted certain blanks in SEBI’s probe and ordered it to cover three more aspects in its investigation, including whether there has been a violation of Rule 19A of the 1957 Rules, whether there has been a failure to disclose transactions with related parties and other relevant information which concerns related parties in contravention with the law, and whether there was any manipulation of stock prices in contravention of existing laws. The expenses of the expert committee would be borne by the Union government.