In its application to the Supreme Court requesting a six-month extension to complete its investigation into allegations made by Hindenburg Research against the Adani Group, the Securities and Exchange Board of India (SEBI) has submitted a detailed status report and prima facie findings to an expert committee in compliance with the court's order.
Based on the allegations made in the Hindenburg Report:
12 Suspicious Transactions for possible violations related to misrepresentation of financials, circumvention of Regulations and/or fraudulent nature of transactions
Possible violations related to Related Party
Transactions (RPT) Disclosures.
Possible violations of Corporate Governance related matters.
Possible violations of Minimum Public Shareholding (MPS) norms in the context of FPI shareholding (Rule 19A of the Securities Contracts (Regulation) Rules, 1957)
Possible stock price manipulation in various stocks of Adani GroupTrading in Adani Group stocks in the periods that are pre- and post-Hindenburg Report:
Possible violations of FPI Regulations.
Possible violations of ODI Norms.
Possible violations of Insider Trading Regulations.
Possible violations of norms of short sellingSEBI also said in its plea that the following investigations would require further time for the conclusion thereof:
Possible violations related to Related Party Transactions (RPT) Disclosures
Possible violations of Corporate Governance related matters.
Possible violation of Minimum Public Shareholding (MPS) norms.
Possible share price manipulations.
Possible violations of FPI Regulations.
Possible violations of ODI Norms.
Possible violations of Insider Trading Regulations/FUTP Regulations.
Possible violations of norms of short selling.SEBI has stated that examination of each of these categories would require further time to arrive at a conclusive finding.
“SEBI also respectfully submits that in respect of the investigation/examination relating to 12 suspicious transactions, prima facie it is noted that these transactions are complex and have many sub-transactions and a rigorous investigation of these transactions would require collation of data/information from various sources along with detailed analysis including verification of submissions made by the companies,” the plea reads.
The regulatory body has also requested a detailed examination of the following:
Financial statements of listed entities and unlisted entities
Financial statements of offshore entities involved in the transactions.
Disclosures filed with the stock exchanges including annual reports, balance sheets, quarterly financial statements and other event-based disclosures.
Minutes of the meetings of their Board of Directors and Audit Committee, wherever applicable
Bank statements of the concerned entities for the relevant period. (The allegations span over a 10-year period)
Connections/relations are amongst entities, both domestic and overseas.
Contracts and agreements, if any, are entered between the entities along with other supporting documents.Given the complexity of the matter, SEBI said that in a normal course, it would take 15 months to conclude the probe, but is making all efforts to complete the investigation in six months. The investigation will require depositions by Key Managerial Personnel and auditors.
