Adani-Hindenburg Case Verdict: Supreme Court Rejects Transfer of Probe from SEBI to SIT

Supreme Court on 3-Jan-24 rejected calls to transfer the investigation into alleged securities law violations by Adani group companies to a Special Investigation Team (SIT). This decision provides relief to the conglomerate nearly a year after Hindenburg Research's report made accusations. The court instructed the Securities and Exchange Board of India (SEBI) to complete the remaining two probes out of the initial 24 within three months.

Background and Allegations

Hindenburg Research, an American short-seller, accused the Adani group in late January 2023 of "brazen stock manipulation and accounting fraud." These allegations were denied by the Adani group.

Following public interest litigations (PILs), the Supreme Court set up an expert panel in March to investigate the issue and suggest enhancements to the regulatory framework.

SEBI was given until May to complete the investigation, and in an interim report in May, the court-appointed expert committee found "no evident pattern of manipulation" in Gautam Adani's companies. However, the report mentioned changes made by SEBI from 2014 to 2019 that limited its ability to investigate, and the probes into money violations from offshore entities found no evidence.

Recent Developments

On December 3, the Supreme Court ruled that there was no ground to transfer the investigation to an SIT. It dismissed reliance on a third-party report (Hindenburg Research) and affirmed faith in SEBI's handling of the case. The government and SEBI were tasked with examining any law infractions suggested by the Hindenburg report on short selling.

Current Market Impact

Adani group stocks, which had plunged initially, rebounded, with flagship companies like Adani Ports and Adani Enterprises witnessing gains. The overall market capitalization of the Adani Group is back above Rs 15 lakh crore but remains below the peak of Rs 23 lakh crore.

Investors reacted positively to the Supreme Court's verdict, with shares of Adani group companies such as Adani Ports and SEZ, Adani Enterprises, Adani Wilmar, Adani Green Energy, Adani Power, Adani Total Gas, and Adani Energy Solutions experiencing upward movement.

Gautam Adani on SC verdict

Billionaire Gautam Adani responded to the Supreme Court's decision in the Adani-Hindenburg case, expressing satisfaction that the "truth has prevailed." Following the court's support of the clean chit given to the Adani group by the Securities and Exchange Board of India (SEBI) over allegations by the US-based short seller Hindenburg Research, Adani shared his thoughts.

In a post, Adani stated, "The Hon'ble Supreme Court's judgment shows that truth has prevailed—Satyameva Jayate. I am grateful to those who stood by us. Our humble contribution to India's growth story will continue. Jai Hind." This reaction from Gautam Adani came shortly after the court's verdict, emphasizing his belief in the integrity of the legal process and expressing gratitude for the support received.

Final Words

Supreme Court's decision not to transfer the case to an SIT and to uphold SEBI's investigation provides a development in the Adani securities law case. Investors are closely monitoring the situation, and the verdict has contributed to the rebound of Adani Group stocks. The regulatory landscape and the outcome of the remaining probes will continue to shape the narrative surrounding this case.