New Delhi, May 19.
A Supreme Court empowered expert committee on Friday informed the court that it did not have enough material to conclude that there was a regulatory failure on SEBI’s part or that the prices of Adani stocks were manipulated.
The committee had been charged with the task of suggesting ways and means to strengthen the regulatory framework to prevent any short-selling of stocks in the future.
The material provided by the market regulator showed that it had had its suspicions regarding Adani and had been probing the company since 2020 much before Hindenberg, it said.
“SEBI had been investigating Adani since 2020 i.e., before Hindenberg but its suspicions remained just that with the regulatory body unable to establish any links between FPIs who had invested in the company with the promoters of Adani or their company.”
The committee said that it would not comment any further on this as SEBI had sought more time to complete the probe. The regulator has so far maintained that its suspicion cannot be translated into a firm case of prosecuting an allegation of violation of the law, the committee report said.
The material, placed before the committee, suggested that SEBI had come to a finding that though on paper the company had been compliant there may have been a violation of the spirit of the law.
But it had so far run into a blank wall in its investigations in unravelling anything further. SEBI has got time till Aug 14 to submit a report on its probe to the court.
The records revealed a chicken and egg situation with SEBI on one hand being suspicious and on the other finding compliance with all attendant regulations, the committee noted.
SEBI has always suspected 13 odd foreign funds but has not been able to establish a link between these funds and the company, the committee said.
The committee concluded that the ownership of FPIs had moved in one direction and enforcement by SEBI in the other.
The committee said that the volatility in Adani was nothing extraordinary, but was almost on par with the volatility shown by stock exchanges after covid.
“The adverse impact on Adani stock prices stood mitigated with measures such as the Adani group promoters paring down debt raised, secured by encumbrances on their shareholding, and infusion of fresh investment into Adani stocks by way of purchase of shares worth nearly USD 2 billion by a private equity investor from the promoters of the Adani group.”
The market has since repriced and reassessed the Adani stocks and while they may not have returned to the pre-Jan 2023 levels, they are stable at the newly priced level, it said.
The members of the committee are retired Supreme Court judge Justice A.M, Sapre, retired Bombay High Court judge Justice J.P. Devadhar, former SBI Chairman O.P. Bhatt, former ICICI Bank chief K.V. Kamath, Infosys co-founder Nandan Nilekani and securities and regulatory expert Somasekhar Sundaresan.
