Adani Hindenburg Case Update: Supreme Court Allows SEBI Investigation

Adani Hindenburg Case Update: Supreme Court Allows SEBI Investigation to Proceed

In a recent development in the Adani Hindenburg case, the Supreme Court has declined to intervene in the ongoing SEBI investigation prompted by allegations from Hindenburg Research. The court has instructed SEBI to conclude its inquiry within the next three months. Prior to this decision, Adani Group shares experienced a surge of up to 10% in early trade, fueled by expectations of a positive outcome from the Supreme Court regarding the Hindenburg case.

The three-judge bench overseeing the case addressed Hindenburg Research’s allegations against the Adani Group and emphasized the urgency of completing the pending investigations. The court had initially assigned 22 cases to SEBI, with two investigations still pending. The Supreme Court’s directive to SEBI underscores the importance of expeditiously concluding the ongoing investigations.

Supreme Court's Ruling Supports SEBI's Actions

Providing a significant reprieve to the Adani Group, the Supreme Court stated that it should not be within the purview of regulatory jurisdiction to order a separate investigation based on the Hindenburg report or similar allegations. The court affirmed SEBI’s authority to continue and finalize its investigation in accordance with existing legal provisions.

The court dismissed any notion that SEBI had been lax in its actions, asserting that there was no foundation to transfer the case to the Central Bureau of Investigation (CBI) at this stage. The decision highlighted that both the government and SEBI would thoroughly investigate any alleged violations of the law, particularly those related to Hindenburg Research’s accusations of short-selling, and appropriate actions would be taken in accordance with the law.

Adani Hindenburg Case
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Chief Justice and Bench's Verdict

The three-judge bench, led by Chief Justice of India Justice DY Chandrachud, Justice JB Pardiwala, and Justice Manoj Mishra, conveyed their decision, emphasizing that there was no valid reason to instruct SEBI to revoke its amendments on Foreign Portfolio Investors (FPI) and Listing Obligations and Disclosure Requirements (LODR) regulations. With SEBI having completed investigations in 20 out of the 22 cases, the bench directed SEBI to finalize the remaining two cases within the stipulated three-month timeframe, considering the assurances from the Solicitor General.

Market Response and Share Movements

Anticipation of a favorable decision from the Supreme Court had already triggered a positive market response, with Adani Group shares witnessing an upswing of up to 10%. Among the top-performing stocks, Adani Energy Solutions recorded the highest gain of 10%, while Adani Total Gas and NDTV shares saw increases of 8% and 7%, respectively. Other Adani Group entities, including Adani Green Energy, Adani Wilmar, Adani Enterprises, Adani Power, and the flagship company Adani Ports, also traded with gains ranging from 3% to 6%.

Background on Hindenburg's Allegations

Hindenburg Research had previously alleged that billionaire Gautam Adani was involved in the ‘biggest fraud in corporate history.’ In a prior hearing, the Supreme Court had cautioned that the content of the Hindenburg Report should not be entirely deemed accurate.

This latest development underscores the judicial stance in allowing SEBI to carry out its investigations independently and impartially, addressing concerns raised by Hindenburg Research while ensuring a fair and transparent process.

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