No regulatory failure: SC panel on Adani

Satya Prakash

New Delhi, May 19

There was no evidence of stock price manipulation in Adani Group companies, a Supreme Court-appointed expert panel — which looked into allegations levelled by US-based short seller Hindenburg Research on January 24 — has said in its report.

A separate SEBI probe into alleged violation in money flows from offshore entities in the Adani Group has “drawn a blank” and pursuing the case could be a “journey without a destination”, the six-member panel headed by Justice (retd) AM Sapre said.

“At this stage, taking into account the explanations provided by SEBI, supported by the empirical data, prima facie, it would not be possible for the committee to conclude that there has been a regulatory failure around the allegations of price manipulation,” the committee said in its 178-page report.

Clarifying that its remit was not to examine if price rise was justified, it said, “It is apparent that SEBI was apparently engaged with developments and price movements in the market.”

The panel, however, said there was evidence of a build-up in short positions on Adani Group stocks ahead of the Hindenburg Research report that alleged fraud, stock manipulation and money laundering at the group. Profits were earned from squaring off positions after prices crashed post publication of the damning allegations.

The committee recommended that “there is a need to develop a proper enforcement policy” and “laying down criteria, on the basis of which SEBI may choose the wide-ranging scope of measures available to it”, including imposing monetary penalty and launching criminal prosecution.

As the news about the Supreme Court-appointed expert panel became public, shares of Adani Group companies rose by almost four per cent in the afternoon session. Justice Sapre panel was set up by the top court on March 2.