SC panel report on Adani Group finds no regulatory failure on price manipulation

An expert committee appointed by the Supreme Court to investigate allegations around Adani Group said it was not possible to conclude if there has been regulatory failure on stock price manipulation allegations.

The panel made the same observation in relation to disclosures of related party transactions. The Supreme Court had appointed the committee after US short-seller Hindenburg Research in a report alleged fraud, stock market manipulation and improper use of offshore entities by Adani Group.

Also read: Only JPC probe into Adani issue will reveal full truth of the ‘Modani scam’: Congress

The expert committee in a report said the Indian stock market as a whole was not unduly volatile post January 24, when Hindenburg came out with its damning report. “The committee notes that all such investigation must be completed in a time-bound manner. At this stage, taking into account the explanations provided by SEBI, supported by empirical data, prima facie, it would not be possible for the committee to conclude that there has been a regulatory failure around the allegations of price manipulation,” reads the report.

According to a Reuters’ report, the expert panel said that there was evidence of a build-up in short positions on Adani Group stocks ahead of a report by the US-based short seller Hindenburg Group. It was not possible to conclude whether there has been regulatory failure regarding price manipulations, the committee said in the report.

Supreme Court appointed expert committee into the Adani -Hindenburg report informs SC that at this stage, taking into account the explanations provided by SEBI, supported by empirical data, prima facie, it would not be possible for the Committee to conclude that there has been a… pic.twitter.com/UGLtbpXmAE

— ANI (@ANI) May 19, 2023

The report said that the committee could not find any pattern of artificial trading among the same parties multiple times. “In one of the patches where the price rose, the foreign portfolio investors (FPIs) under investigation were net sellers. One investing entity that had purchased across the patches had purchased far more of other securities. In a nutshell, there was no coherent pattern of abusive trading that has come to light,” it said.

Also read: SC grants SEBI time till Aug 14 to complete probe against Adani group

On the other hand, it said that SEBI has found that some entities that had taken short positions before the publication of the report have profited from “squaring odd their positions after the price crashed”. “All the parties are still under investigation and thus the committee therefore does not express any opinion on merits,” the report added.

Meanwhile, the apex court on Wednesday granted the SEBI three-month extension to complete its investigation into Hindenburg report against Adani Group. The SC told the SEBI to submit an updated status report on probe into allegations of stock price manipulation by Gautam Adani-led group by August 14.

(With Agency inputs)