‘Prima facie no manipulation by Adani Group’: Supreme Court panel on Hindenburg report

Gautam Adani’s Adani Group was given a clean chit Friday by a Supreme Court-appointed panel of experts that examined data from the national market regulator – the Securities Exchange Board of India, or SEBI – to investigate claims of financial fraud and stock price manipulation made by United States-based short-seller Hindenburg Research in January.

The six-member panel also said it found no evidence to indicate regulatory mechanisms’ failure after the sharp rise of Adani Group stocks, and that the market is not ‘unduly volatile’.

The panel – which called on SEBI to complete its own (independent) investigation as early as possible – said data provided by the regulator indicated ‘no evident pattern of manipulation’ in the prices of stocks of companies owned by Gujarat-based business tycoon Gautam Adani.

“At this stage, taking into account explanations provided by SEBI (and) supported by empirical data, prima facie it would not be possible for the committee to conclude there was a regulatory failure around the allegation of price manipulation,” the panel said in its report.

“Volatility in Adani stocks was indeed high (but this) is attributable to the publication of the Hindenburg report and its consequences,” the report – submitted early this month – added.

The meteoric rise in stock prices could not be attributed to ‘any single entity or group of connected entities’, the Supreme Court-appointed panel told the top court.

The panel was led by former Supreme Court judge Justice AM Sapre.

SEBI was asked to file a report within two months but on Wednesday was granted an extension till August 14 to complete its inquiries. The deadline extension was accompanied by a politcal row after SEBI submitted an affidavit that said reports it has been probing the Adani Group since 2016 (a claim made by some opposition leaders) are ‘factually baseless’.

Nine of 10 Adani Group stocks traded higher after the report was made public.

Flagship Adani Enterprises Ltd. recovered the day’s losses and jumped as much as 3.8 per cent, while Adani Ports and Special Economic Zone Ltd. climbed 2.2 per cent.

In March, the Supreme Court tasked the panel with investigating possible regulatory failures and to suggest reforms for investor protection after bombshell allegations in the Hindenburg report wiped more than $100 billion off the Adani Group’s market value, triggering a massive political controversy and red flags about the Indian stock market as a whole.

Opposition parties forced Parliament into a standstill after a significant part of the Budget Session was disrupted by protests and calls for detailed inquiries into Hindenburg Research’s claims, as well as counter-allegations linking prime minister Narendra Modi and Adani.

The Adani Group has denied all allegations by Hindenburg Research and has been working on a comeback strategy that includes the $2.6 billion fundraising plan announced this month.