Hindenburg Report Row: Supreme Court tells govt, SEBI to respond, mulls panel to protect investors

Satya Prakash

New Delhi, February 10

Maintaining that there should be a robust mechanism to protect the interests of Indian investors, the Supreme Court on Friday asked the Centre and market regulator SEBI to respond to two PILs alleging that innocent investors suffered huge losses following Hindenburg report resulting in crash of Adani Group share prices.

“It is said the total loss by Indian investors is several lakh crores… it is said (Rs) 10 lakh crores… How do we ensure they are protected? How do we ensure that this does not happen in future? What role should be envisaged for SEBI in future?” a three-judge Bench led by CJI DY Chandrachud asked.

Asking the Finance Ministry, SEBI and others to give their inputs on various issues, including on making the regulatory mechanism robust to protect the investors’ interests in the market where capital flow is seamless, the Bench posted the matter for further hearing on February 13.

“Probably SEBI is also doing its investigation. Please tell your officers also this is no witch-hunt that we are planning to do,” it told Solicitor General Tushar Mehta, who said the market regulator and other statutory bodies were doing the needful.

The Bench, which also included Justice PS Narasimha and Justice JB Pardiwala, hinted at setting up a panel of domain experts, besides putting in place “robust practices” to protect innocent investors even as it clarified that it was “just thinking aloud” and not making any observation on merits of the case as “the stock markets usually run on sentiments”.

“We do not want to cast any doubt on SEBI or other regulatory agencies. But the suggestion is to have a broader thought process so that some inputs can be obtained and then the government can take a call as to whether some modification is required in the statute or the regulatory framework,” the Bench said.

However, it said, “Beyond a certain stage, we won’t enter into the policy domain… But there should be a mechanism so that it doesn’t happen in the future. This is the call that the government has to take. We need to put into place a mechanism that will ensure that this will not happen in the future.”

“It is a little premature for me to immediately answer. The trigger point was the (Hindenburg) report, which was beyond our territorial jurisdiction. There are regulations which deal with the concerns. We are also concerned,” Mehta submitted.

The Adani Group stocks have tanked on the bourses after Hindenburg Research made a litany of allegations, including fraudulent transactions.

FM rejects ‘Budget for Adani’ charge

• FM Sitharaman rejected Opposition charges of Budget allocations for green energy being made keeping Adani Group in mind, alleging it might be Congress culture to give benefits to ‘jijas’ and ‘bhatijas’

Shares hit bottom

• Shares of Adani Group’s flagship company Adani Enterprises hit the lower circuit-breaker by falling 10%

Moody’s cuts rating

• Moody’s has revised downwards the ratings on four Adani companies to ‘negative’ from ‘stable’

US law firm hired

• Adani Group has hired US legal powerhouse Wachtell to take on Hindenburg