New Delhi: The Securities and Exchange Board of India (SEBI) has denied investigating the Adani Group in connection with its probe into alleged Global Depository Receipt (GDR) irregularities. A GDR is a negotiable certificate representing shares in a foreign company traded on a local stock exchange.
In an additional affidavit filed before the Supreme Court Monday, the market regulator said while it probed 51 companies during its inquiry into alleged GDR irregularities, no listed company of the Adani Group was part of that list.
Filed by Satyansh Maurya, an assistant manager with SEBI, the affidavit sought to counter the assertion made by Anamika Jaiswal, one of the petitioners, who moved the apex court demanding a probe into US-based short seller Hindenburg Research’s allegations of “brazen stock manipulation and accounting fraud” against the Adani Group.
Jaiswal’s lawyer Prashant Bhushan claimed earlier that SEBI had been investigating the Adani Group since 2016. The statement was made to oppose SEBI’s request to grant the regulator more time to complete its probe the alleged breach of law by Adani Group.
In an application filed on 29 April, SEBI requested the court to extend the deadline by another six months for it to complete the probe. A bench led by Chief Justice D.Y. Chandrachud had on 2 March directed SEBI to complete its probe within two months.
A similar timeline was fixed for the expert committee headed by retired SC judge Justice A.M. Sapre to review market regulatory mechanism in light of the Adani-Hindenburg controversy. The panel submitted its findings to the court in a sealed-cover report last week.
In its additional affidavit filed Monday, SEBI also defended its request for more time to carry out its probe, saying it wanted to avoid any incorrect, premature or legally untenable conclusion in the case.
During a hearing on 12 May, the bench indicated it was not willing to give another six months to SEBI.
However, it then adjourned the matter so that it could peruse Justice Sapre committee’s report before issuing any orders on SEBI’s application. But the bench was unable to hear the case Monday due to time constraints and pushed the next hearing in the case to Tuesday.
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GDR probe didn’t include Adani: SEBI
In his submission last week, Bhushan said it was surprising that SEBI wanted more time to complete its probe against Adani. According to him, SEBI’s investigation related to the Hindenburg report may have been new but the regulator was probing Adani since 2016 and had yet not given a preliminary finding on its investigation.
He based this assertion on a reply given by the Minister of State (MoS) for Finance to Parliament in July 2021 where it was disclosed that SEBI in June 2016 directed depositories to freeze particular beneficiary accounts of certain Foreign Portfolio Investments (FPIs) including Albula Investment Fund, Cresta Fund, and APMS Investment Fund.
Bhushan claimed Albula Investment Fund, Cresta Fund and APMS Investment Fund, registered in Mauritius, together own shares worth more than Rs 43,500 crore in Adani Group companies such as Adani Enterprises, Adani Green Energy, Adani Transmission and Adani Total Gas.
SEBI’s additional affidavit, however, stated that while it did conduct an investigation related to suspected misuse of Global Depository Receipts against 51 listed companies, the probe did not include Adani.
“Pursuant to completion of investigation, appropriate enforcement actions were taken in this matter. Hence, the allegation that SEBI has been investigating Adani since 2016 is factually baseless. I, therefore, say and submit and reliance sought to be placed on the investigation pertaining to GDRs is wholly misplaced,” submitted the affidavit.
In the additional affidavit, SEBI also highlighted the complexity of the transactions mentioned in the Hindenburg report and said that those 12 transactions have many sub-transactions across numerous jurisdictions.
Therefore, a rigorous investigation of these transactions would require collation of data/information from various sources, including bank statements from multiple domestic as well as international banks, financial statements of onshore and offshore entities involved in the truncations and contracts and agreements, if any, entered between entities along with other supporting documents.
Then, an analysis would have to be conducted on the documents received from various sources before conclusive findings can be arrived at, the regulator informed the top court.
In the context of its investigation into Minimum Public Shareholding (MPS) norms, SEBI has already approached 11 overseas regulators under its Multilateral Memorandum of Understanding (MoU) with the International Organisation of Securities Commission (IOSCO). Various requests for information were made to these regulators, with the first one conveyed on 6 October, 2020.
A detailed note on the responses SEBI received to its request from some overseas regulators has been provided to the court-appointed expert committee.
(Edited by Amrtansh Arora)
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