New Delhi: Two US regulatory bodies are launching probes into the Adani Group’s disclosures to its American investors in the wake of an adverse report of Hindenburg Research, according to a Bloomberg report.
In January, the US based short-seller had released the report alleging various illegal and unethical business practices conducted by Gautam Adani’s ports-to-power conglomerate.
“The US Attorney’s Office in Brooklyn, New York, has sent inquiries in recent months to institutional investors with large holdings in the India conglomerate,” the Bloomberg report said, citing a person familiar with the inquiries. “The requests for information were focused on what Adani Group told those investors, said the person, who asked not to be identified because the probe isn’t public.”
The report added that the Securities and Exchange Commission — the US counterpart to the Securities and Exchange Board of India (SEBI) — is also conducting a similar probe, citing two other people aware of the developments.
Bloomberg, however, noted that such requests for information from American prosecutors don’t necessarily lead to criminal or civil proceedings “as law enforcement agencies often open inquiries that don’t lead to action”.
“Our various issuers groups remain confident that the disclosures are full and complete as disclosed in the relevant issuer offering circulars,” a spokesperson of the Adani Group told Bloomberg.
The Hindenburg report, released on 24 January, accused the Adani Group of artificially inflating the value of its stocks, through an elaborate web of offshore corporations within tax havens. It also asserted that the group failed to follow disclosure and shareholding rules.
In a 413-page response to the report on its business interests, the Adani Group attacked Hindenburg as “an unethical short seller”. “The document is a malicious combination of selective misinformation and concealed facts relating to baseless and discredited allegations to drive an ulterior motive,” it had said.
Subsequently, the Supreme Court formed a six-member panel in March to look into any potential wrongdoing by the Adani Group, as well as any shortcomings in regulation by the SEBI.
The panel then submitted its report on 6 May, in which it said that there was no evidence that the Adani companies had broken any law or failed to comply with any regulation. Instead, it found fault with the way SEBI had been handling its investigation.
The SEBI, too, is conducting an investigation into possible violation of securities law and regulatory disclosures by the Adani Group. In May, the apex court gave the market regulator three more months to wrap up its probe.
(Edited by Tony Rai)
Also Read: Adani Group market value fell 52% in 6 months up to April, 6.4% drop for India’s top 500 pvt firms