The Supreme Court has rejected a petition seeking review of its January 3 verdict upholding the Securities and Exchange Board of India’s (SEBI) investigation into allegations of stock price manipulation and failure to disclose transactions in violation of regulatory and securities laws filed by US-based Hindenburg Research against the Adani Group.
A review bench headed by Chief Justice of India DY Chandrachud dismissed a review petition filed by Anamika Jaiswal, represented by lawyer Prashant Bhushan, who had sought a court-monitored investigation by a special investigation team or the Central Bureau of Investigation (CBI).
In its May 5 order, the court said there was no clear error on the face of the January record that would justify the rare remedy of reconsideration.
The 46-page judgement, issued in January, had fully endorsed the SEBI investigation, noting that the market regulator’s investigation was “credible” and comprehensive.
The Supreme Court has in fact taken note of the “conduct” of Hindenburg Research and directed the Securities and Exchange Board of India (SEBI) and central investigating agencies to look into whether the losses suffered by Indian investors due to the US-based company taking short selling positions in Adani Group through US-traded bonds and derivatives traded outside India involved any violation of any law and take “appropriate action”, if necessary.
The January ruling was based on a petition alleging that a fall in Adani Group’s share price following the publication of a report by “activist short seller” Hindenburg Research on Jan. 24, 2023, had led to a “sharp decline” in investor wealth and stock market volatility.
Adani stock volatility
The court also concluded that fluctuations in Adani’s shares in the aftermath of the Hindenburg report only had an individual impact and did not lead to market fluctuations.
“The group’s share prices fluctuated but did not pose a market-wide risk. According to the expert committee (Justice AM Sapre committee), the trend in volatility observed in the Indian market, as compared to global volatility indices, has been consistent since the COVID-19 pandemic and remained so during the period when volatility was observed in Adani shares,” Chief Justice Chandrachud pointed out.
The ruling said an investigation can be transferred to another agency only in special circumstances such as “clear and deliberate default” by the agency.The court had also directed SEBI to complete the pending investigations expeditiously, “preferably” within three months, saying the regulator cannot leave the investigations “indefinite with an open deadline”.
