Hindenburg vs Adani: How SEBI is involved in the high-stakes investigation
The Securities and Exchange Board of India (Sebi) is tasked with safeguarding investor interests, fostering the development of the securities market, and regulating it under the Sebi Act of 1992.
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FollowUS-based Hindenburg Research has raised allegations against SEBI chairperson Madhabi Puri Buch, accusing her of a conflict of interest due to alleged ties with the Adani Group. Hindenburg reportedly claimed that these ties compromised the regulator's investigation into accusations of manipulation and fraud against Gautam Adani's conglomerate. Both Madhabi Puri Buch and her husband, Dhaval Buch, have strongly denied these allegations.
What is SEBI, and what are its functions?
The Securities and Exchange Board of India (Sebi) is tasked with safeguarding investor interests, fostering the development of the securities market, and regulating it under the Sebi Act of 1992.
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SEBI has the authority to establish rules, enforce them, and adjudicate disputes under various acts, including the Securities Contracts (Regulation) Act of 1956 and the Companies Act of 2013.
SEBI plays a crucial role in the development and regulation of India's securities market, with a focus on investor protection through awareness programs, financial literacy initiatives, and addressing grievances. Additionally, SEBI works on global securities standards as part of the International Organization of Securities Commissions (IOSCO).
SEBI had initiated an investigation into Hindenburg's accusations against the Adani Group, which included allegations of share price manipulation and accounting fraud. The regulator informed a Supreme Court-appointed panel last year that it was probing 13 opaque offshore entities that held significant stakes in Adani's publicly traded stocks.
The Supreme Court dismissed a plea for a court-monitored investigation into these allegations, citing no regulatory failure by SEBI. While SEBI sent show-cause notices to Adani's flagship companies earlier this year, the final report, which was due to the Supreme Court in April, remains pending.
Last month, SEBI issued a show-cause notice to Hindenburg, accusing the firm of making "unfair" profits through "collusion" and using "non-public" and "misleading" information to trigger "panic selling" in Adani Group stocks. SEBI alleged that Hindenburg had shared an advance copy of its report against the Adani Group with a New York-based hedge fund manager, profiting from the subsequent share price fluctuations.
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