Hindenburg Report Fallout: Supreme Court Appoints Panel to Investigate Adani Group

02-03-2023 : The Supreme Court’s decision to appoint a six-member expert panel to investigate regulatory failures in relation to the Adani Group is a significant development that has generated political heat and interest across India. The panel, headed by retired Justice Abhay Manohar Sapre, includes experts from various fields, including finance, law, and banking. The panel has been asked to investigate any regulatory failures in dealing with the alleged contravention of laws pertaining to the securities market in relation to the Adani Group or other companies.

The Adani Group faced a market crash following the release of the Hindenburg Research report, which made allegations of corporate governance lapses and conflicts of interest against the group. The report raised concerns about related-party transactions and the potential manipulation of stock prices. The allegations were significant, given the Adani Group’s growing influence in various sectors of the Indian economy, including infrastructure, power, and ports.

The opposition parties, particularly the Congress and its leader Rahul Gandhi, have been relentless in raising the issue and demanding a probe into the allegations. The government had opposed setting up the expert panel, but the Supreme Court’s decision to do so has given the opposition parties significant political ammunition in the run-up to the elections.

The expert panel has been given a two-month deadline to submit its report in a sealed cover. The panel’s mandate includes assessing the extant regulatory framework and making recommendations to strengthen it. The panel will also investigate the relevant causal factors that led to the volatility in the securities market and suggest measures to strengthen investor awareness.

In addition to the expert panel probe, the Supreme Court has asked the market regulator, SEBI, to investigate any lapses in the present case, including violations of securities market rules, failures to disclose transactions with related parties, and potential manipulation of stock prices. SEBI has also been asked to provide information on any actions it has taken in relation to the Adani Group case.

Overall, the Supreme Court’s decision to appoint an expert panel and direct SEBI to investigate potential lapses is a significant step towards strengthening the regulatory framework in India and protecting the interests of investors. The outcome of the expert panel’s investigation and SEBI’s investigation could have significant implications for the Adani Group and other companies operating in India’s securities market.

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