Can't conclude currently that SEBI failed: SC's expert panel on Adani-Hindenburg saga

A committee set up by the Supreme Court in its report said that it currently cannot conclude that there has been a regulatory failure on the part of SEBI on the allegation of price manipulation in the Adani-Hindenburg saga.

“At this stage, taking into account the explanations provided by SEBI, supported by empirical data, prima facie, it would not be possible for the committee to conclude that there has been a regulatory failure around the allegation of price manipulation,” the six-member panel said.

The Securities and Exchange Board of India (SEBI) has identified 13 specific transactions where it is investigating the underlying transactions regardless of whether they are legally considered 'related party transactions' from the standpoint of assessing if they were fraudulent in nature, the committee noted.

The SC-appointed panel, headed by former apex court judge Justice AM Sapre stressed that while SEBI is actively collecting data on these transactions, it has to complete the investigations in a time-bound manner.

On the question of a regulatory failure, the panel said it is of the view that it would not be possible to return a finding of regulatory failure in the context of regulations prevailing when these transactions were effected.

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The committee said that no pattern of artificial trading or wash trades among the same parties multiple times was found and no coherent pattern of abusive trading came to light.

SEBI found that there were some entities who took short positions before Hindenburg published its report and profited by squaring off their positions once the prices crashed.

The committee said that the market has re-priced and re-assessed the Adani stocks. "While they may not have returned to the pre-January 24 levels, they are stable at the newly re-priced level," it said.

The committee noted that as per empirical data, retail investors' exposure to Adani stocks increased after January 24, 2023. Basis this, it concluded that the Indian stock market as a whole was not unduly volatile during the period under reference.

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