SEBI urges caution after Hindenburg report Regulator says investigations into Adani Group almost over Stock Exchange

The Securities and Exchange Board of India (SEBI) has issued a statement in relation to the recent report by Hindenburg Research, published on August 10, 2024. SEBI urges investors to remain calm and cautious while reacting to the report, noting that Hindenburg Research’s disclosures include a disclaimer regarding potential short positions in the securities discussed.

The Hindenburg report raised concerns about SEBI’s inaction on Adani Group and questioned the rationale behind SEBI’s June 27, 2024, notice to refer the matter to a research firm. The report also claims that the recent changes in SEBI’s (REIT) Regulations, 2014, have been designed to benefit the international financial conglomerate. SEBI’s response indicates that these allegations are being looked into thoroughly.

SEBI said it had conducted thorough investigations into the allegations against the Adani Group. The Supreme Court, in its order dated January 3, 2024, held that SEBI had completed 22 out of 24 investigations into the group by then. SEBI has since completed one more investigation and the latest is nearing completion. During these investigations, SEBI issued over 100 notices, around 1,100 letters and emails and sought assistance from various regulatory authorities and agencies. Over 300 documents running into around 12,000 pages were scrutinised.

“SEBI has conducted a comprehensive investigation into the allegations made against the Adani Group,” it said in a statement. “We have issued over 100 notices, around 1,100 letters and emails and have sought assistance from domestic and foreign regulatory authorities. Over 300 documents have been scrutinised and enforcement proceedings are underway as per applicable securities laws.”

SEBI mentioned that it follows a quasi-judicial process in enforcement proceedings, which includes issuing notices seeking evidence and conducting hearings before issuing a final order. The regulator emphasised that it refrains from commenting on ongoing investigations or enforcement cases to maintain procedural integrity.

“The notice of cause of action against Hindenburg Research has been filed in accordance with due process of law,” SEBI said. “We are committed to ensuring that all proceedings are conducted in accordance with the established procedures and principles of natural justice.”

READ ALSO | SEBI chief Buch refutes Hindenburg’s allegations, stating necessary disclosures were made

Hindenburg Row: SEBI Defends Regulatory Changes

On the SEBI (REIT) Regulations, 2014, SEBI defended the amendments, noting that they were made after a robust consultative process. “The regulations are notified only after approval by the SEBI Board, after a consultative process involving industry stakeholders and the general public,” SEBI explained. “The agenda documents of the Board meetings and the outcome of the Board discussions are published on the SEBI website, ensuring transparency.”

In response to Hindenburg’s allegations about SEBI Chairwoman Madhabi Puri Buch and her husband’s investments in offshore funds, Buch and her husband Dhaval Buch have vehemently denied the claims. They have described the allegations as baseless and have stressed that their investments were made before Buch’s appointment to the SEBI position and have been fully disclosed. The Adani Group has also denied any commercial arrangements with the Buchs and has stressed that their investments were minimal and occurred before Buch’s regulatory role.

Hindenburg had earlier alleged that the Buchs’ investments were linked to entities used by Vinod Adani, Gautam Adani’s brother, to manipulate stock prices. SEBI responded to the allegations by confirming that the investments were transparent and disclosed in accordance with regulatory norms. The Adani Group also rejected the allegations as manipulative and reiterated its commitment to transparency.

The Congress has used the report to reiterate its call for a Joint Parliamentary Committee (JPC) to investigate the Adani Group’s dealings, while the BJP has dismissed the opposition’s demands as part of a conspiracy to destabilise the Indian financial market.