Tuesday, September 26, 2023

Attorney General Tushar Mehta clarifies in Supreme Court that SEBI’s 2016 GDR investigation had nothing to do with listed Adani cos

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  • Social media links SEBI’s 2016 GDR order against 51 companies to the regulator’s investigation into Hindenburg’s allegations.
  • Attorney General says there is an intentional attempt to connect two unrelated issues.
  • SEBI has submitted a status report to the High Council on her research on the minimum standards of public ownership in Adani group companies.

It is a well-known fact that social media can wreak havoc on both individuals and businesses, but the influence of these platforms is further underlined when the country’s attorney general has to answer questions posed on social media at the apex- court. Since last week, there has been a lot of chatter on social media about whether or not the market regulator is investigating the Adani group. India’s Advocate General Tushar Mehta on behalf of the Securities and Exchange Board of India (SEBI) on Wednesday clarified some facts surrounding the market regulator’s investigation against the Adani group.

In his submission to the Supreme Court, he said: “In order to abundantly clarify the issues raised in the social media comments, the following is filed…” He explained that a false connection was made between SEBIs GDR of 2016 probe and the Adani group. Tushar Mehta reiterated in the SC today that the 2016 GDR issue was totally different, distinct and completely separate from the July 19, 2021 response from the Finance Minister to Parliament in which he had said that SEBI was investigating a Adani group of companies regarding the minimum standards of public ownership.

The submission of the SG explains what SEBI investigates and what it does not. In 2016, SEBI approved an injunction against 51 listed entities related to Global Depository Receipts. The statement submitted to the Supreme Court on Wednesday reads: “No listed company of the Adani Group was part of the aforementioned list of 51 companies, specifically mentioned in our May 15, 2023 rejoinder to the Honorable Supreme Court. However, there were some FPIs, including Cresta Fund Limited, Albula Fund Limited and APMS Fund Limited, whose relevant GDR accounts were frozen as a result of the 2016 order. It has no connection and/or connection with the issues referred to and/or arising from the Hindenburg Report, but there are attempts to relate the two.

On the issue of minimum standards for public ownership, the markets regulator has approached 11 foreign regulators under the Multilateral Memorandum of Understanding (“MMOU”) with the International Organization of Securities Commissions. SEBI has said it has obtained information from several global regulators under its MMOU. The first request to foreign regulators was already made on October 6, 2020. To date, there is no conclusion of any alleged wrongdoing in this matter as it is still under investigation.

SEBI has informed the Supreme Court of India that it is investigating allegations made by Hindenburg Research in its report on the Adani group. One of the allegations made by the research firm was non-compliance with minimum standards for public ownership. The regulator’s status report on this has been submitted to the six-member committee of experts appointed by the apex court.

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