Hindenburg row: SC constituted panel finds no proof of Adani's regulatory violation; Sebi wants to conduct additional research
- The six-member Supreme Court appointed committee does not find Adani Group to be in breach of existing securities laws.
- Sebi in 2018 changed rules for foreign portfolio investors such that they were no longer required to disclose the last natural person above every person owning economic interest in the FPI.
- Despite this, Sebi still wants more time to investigate the ultimate beneficiaries behind the 13 FPIs to see if there is a link with the group.
In its findings, the Supreme Court-appointed six-member committee stated that it had not discovered any proof of Adani Group violations of the law governing the market. Sebi (the Securities and Exchange Board of India) wants more time to look into the allegations presented in the Hindenburg report, nevertheless. The onus is now squarely on Sebi, which has asked for more time to look into potential violations of the rules governing related party transactions and minimum public shareholding. According to the article, Sebi wants additional time to conduct more investigations. Between Sebi and the Honourable Supreme Court, this is a matter. After Sebi demonstrated a desire to go beyond the scope of its own regulations, the committee demanded the creation of a cogent enforcement strategy.
The biggest allegation against the Adani Group has been that it has violated minimum public shareholding norms because of 13 entities that have been under investigations since 2020 that own substantial stakes in listed Adani companies. A violation of MPS norms would have been proven if the ultimate beneficiary of these 13 foreign portfolio investors (FPIs) could be in any way traced back to the promoters of Adani Group.
It's interesting to note that Sebi modified the regulations in 2018 so that FPIs were no longer needed to declare "the very last natural person owning any economic interest in the FPI." This indicates that, contrary to what is required by the Prevention of Money Laundering (Maintenance of Records) Rules, 2004, the regulator cannot look farther than the declarations made by the natural people in charge of each of these FPIs to determine who is the ultimate beneficiary.
