After a bombshell claim from a U.S. short seller, India’s supreme court established an impartial team to look into any regulatory shortcomings linked to the charges against the Adani Group.
Important POINTS
- The 6 person panel was given a directive to look into “regulatory failure in dealing with the alleged breach of laws relevant to the securities market in regard to the Adani Group” by the nation’s top court, according to a court order issued on Thursday.
- After a bombshell claim from a U.S. short seller, India’s supreme court established an impartial team to look into any regulatory shortcomings linked to the charges against the Adani Group.
- The ports-to-energy conglomerate’s family is led by billionaire founder Gautam Adani, who expressed his appreciation for the Supreme Court’s ruling.
The committee will also submit a “overall evaluation of the situation including the key causative causes which have contributed to the volatility in the securities market in the recent past,” stated the court ruling.
The group will also provide recommendations for actions to “ensure compliance with the existing framework for the protection of investors” and to enhance the regulatory system.
After Hindenburg Research published a complete analysis on January 24 accusing Adani Group of stock manipulation and fraud, the Indian Supreme Court took action a little over a month later. The group denied any wrongdoing in a response that spanned more than 400 pages.
The disaster caused a significant selloff of the Group’s equities, wiping away nearly $140 billion in market capitalization from the conglomerate’s seven largest listed firms.
Justice Sapre, a former Supreme Court justice, will serve as the panel’s chair. OP Bhatt, KV Kamath, Nandan Nilekani, Somsekhar Sundaresan, and retired Judge JP Devdhar are the other members of the committee.
manipulating investments?
The Securities and Exchange Board of India, the nation’s market regulator, has also been ordered by the Supreme Court to look into “if there was any manipulation of stock prices in breach of existing rules,” according to the court order.
It said, “SEBI shall promptly complete the inquiry within two months and provide a progress report.
The highest court of India stated that the necessity to safeguard Indian investors from market volatility and the “loss of investor capital in the securities market during the previous several weeks due to a rapid decrease in the share price of the Adani Group of companies” were the driving forces behind its direction.
These petitions included demands that the court look into concerns about “public money” being “at danger since public institutions like the State Bank of India and the Life Insurance Corporation of India are exposed to the Adani Group,” according to the court judgement.
Aswath Damodaran, a professor of finance at New York University’s Stern School of Business, said that the Adani Group has taken advantage of the “weakest linkages” in Indian institutions in a recent blog post. He added that the Adani incident offers a chance for Indian institutions to draw conclusions and work to address the issues.
According to the economist, “I have learnt not to impute to venality or corruption that which might be attributed to inertia and indifference” regarding the institutions involved, which include banks, regulatory agencies, and [Life Insurance Corporation], on his blog. He said, “There are lessons for the nation as a whole, as it looks into what it believes will be its decade of prosperity. A more nuanced interpretation of the Adani tale is that the family group has exploited the fissures and weakest links in the India story, to its benefit.
Adani-Modi connections
The ports-to-energy conglomerate’s family is led by billionaire founder Gautam Adani, who expressed his appreciation for the Supreme Court’s ruling. Adani posted on Twitter on Thursday, “The Adani Group welcomes the ruling of the Hon’ble Supreme Court. That will provide closure in a timely manner. The truth will win out.
The mogul’s quick fall from grace has prompted new inquiries into his intimate associations with India’s Prime Minister Narendra Modi.
The upheaval surrounding Adani, according to billionaire investor George Soros, could significantly undermine Modi’s hold on power and trigger a “democratic resurgence” in the nation, he claimed last month.
Soros explicitly criticised the tight alliance between Modi and Adani. Both guys are from Gujarat, a state in western India. Early on, Adani backed Modi’s political ambitions and promoted his vision for India’s economic development.
“Business tycoon Adani and Modi are close friends, and their futures are entwined. Soros said that Adani Enterprises sought to raise money on the stock market but was unsuccessful.
Adani’s stock crashed like a house of cards when allegations of stock manipulation surfaced. Modi has not spoken on the matter, but he will need to respond to inquiries from international investors and from lawmakers, the investor continued.