Adani Hindenburg Issue: Supreme Court adjourns the hearing

The hearing for the Adani Hindenburg issue, which involves the Securities and Exchange Board of India (SEBI), the organization in charge of regulating the capital markets, has been rescheduled by the Supreme Court. According to reports in the media, the constitution bench chaired by the Chief Justice of India would continue to examine applications that challenge the repeal of Article 370.

SEBI’s Investigation and Status Report on Adani Hindenburg Issue

According to the report, SEBI provided a status update on August 25 on its investigation into the allegations made against the diversified conglomerate Adani by short-seller Hindenburg Research in its January report. Adani is engaged in port and energy operations.

Finding the financial stakes of shareholders among the 12 Foreign Portfolio Investors (FPIs) among these entities presents a difficult part of the investigation, according to SEBI, who noted that many of these entities are situated in offshore tax havens, report stated.

According to PTI, SEBI told the top court that it is presently awaiting information from five offshore tax havens to determine who the real beneficiaries are behind the foreign investors who are involved with the conglomerate.

Short Selling and Enforcement Directorate (ED) Discovery

The Indian Express reported that the Enforcement Directorate (ED) found that 12 companies made money via short-selling Adani stock. IE reported that two Indian businesses, one registered in New Delhi and the other in Mumbai, are among the short-sellers.

The proprietors of the Delhi-based company are also the subject of a SEBI order for allegedly misleading investors and manipulating the stock market.

Investigation Initiation and Market Worth Impact

The US-based Hindenburg Research, which expressed concerns over governance, prompted the SEBI to launch a probe into the Gautam Adani-led organization. The market value of the conglomerate’s businesses as a whole decreased by more than $100 billion as a result of these worries.

Adani Group’s Response and Potential Consequences

According to a recent report by Reuters, the conglomerate involved in port and energy operations denied any wrongdoing in January. Due to a lack of clearance to speak with the media, the sources, who wished to remain anonymous, described the infractions as mostly “technical” in nature.

Once the investigation is over, it is anticipated that these violations will only result in a monetary fine. According to sources cited by Reuters on Monday, SEBI does not expect to make the study publicly available until the regulatory body has announced its conclusions about the Adani inquiry.

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Penalties and Offshore Fund Holdings

According to the sources, “the penalty could go up to a maximum of 10 million rupees ($121,000) for each violation by each entity.”

Additionally, the investigation revealed that some Adani companies’ ownership of offshore funds did not follow the rules, according to them.

According to Indian law, a foreign investor may make a maximum 10% investment through the foreign portfolio investor route; any bigger investment is categorized as a foreign direct investment.

The second of the two sources told Reuters that “some offshore investors have accidentally exceeded this limit,” but they would not provide further information.

Conclusion of Adani Hindenburg Issue Investigation and Findings

On Friday morning, SEBI informed the Supreme Court that its inquiry into the Adani Group’s operations was almost over.

According to the sources, one significant finding was a failure to disclose certain related-party transactions.

One of them added, “Transactions with a related party need to be identified and reported.” “If not done, it could present an inaccurate picture of the financials of the Indian listed company.”

The regulatory body stated that it had examined 13 instances of transactions involving related parties in its submission to the court.

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