The Supreme Court has rejected a plea to review its January 3 verdict upholding the Securities and Exchange Board of India (SEBI) investigation into allegations of share price manipulation and failure to disclose transactions in violation of the regulations and securities’ laws raised by US-based Hindenburg Research against the Adani Group.
The Review Bench led by Chief Justice of India DY Chandrachud dismissed the review petition filed by Anamika Jaiswal, represented by advocate Prashant Bhushan, who had sought a court-monitored probe by a Special Investigation Team or by the Central Bureau of Investigation (CBI).
The court, in a May 5 order, said there was no error apparent on the face of the record of the January warranting the rare remedy of a review.
The 46-page judgment in January had backed the SEBI probe to the full hilt, noting that the market regulator’s investigation ‘nspired confidence’ and was comprehensive.
The Supreme Court had in fact trained the spotlight on the “conduct” of Hindenburg Research, directing the SEBI and Central investigating agencies to probe and, if necessary, take “suitable action” if the losses suffered by Indian investors due to the short position taken by the US-based firm in the Adani group through US-traded bonds and non-Indian traded derivative instruments had involved any infraction of law.
The January judgment was based on petitions claiming “precipitate decline” in investor wealth and volatility in the share market due to a fall in the share prices of the Adani Group following a report published by “activist short seller” Hindenburg Research on January 24, 2023.
Volatility in Adani stocks
The court had also concluded that the volatility in Adani stocks in the aftermath of the Hindenburg report had an impact only at an individual scale and did not result in volatility in the market.
“While shares of the group fluctuated, it did not pose any systemic market-level risk. According to the Expert Committee (Justice AM Sapre Committee) the trend observed in volatility in the Indian market in comparison with the global volatility index has been consistent since the Covid-19 pandemic and was maintained even during the period when volatility was observed in the Adani stocks,” Chief Justice Chandrachud had noted.
The judgment had reasoned that transfer of investigation to another agency could only be exercised by the court in extraordinary circumstances like “glaring, willful and deliberate inaction” by an agency. The court had at the point ordered SEBI to expeditiously complete the pending investigations “preferably” within three months, and said the regulator cannot leave the probe “open-ended and indeterminate in time”.