Hindenburg report on Adani: Supreme Court requests an investigation by a panel of experts led by retired judge Justice AM Sapre

Hindenburg report on Adani

The group will also include OP Bhat, Justice JP Devdatt, KV Kamath, Nandan Nilekani, and Somasekhar Sundaresan in addition to Justice Sapre.

The Supreme Court established a committee on Thursday to look into the controversy surrounding the Hindenburg Research report on the Adani Group of Companies and allegations against the Congolerate [Vishal Tiwari vs Union of India and ors]. The committee is chaired by retired Supreme Court Justice AM Sapre.

The group will also include OP Bhat, Justice JP Devdatt, KV Kamath, Nandan Nilekani, and Somasekhar Sundaresan in addition to Justice Sapre.

The following elements will be looked at by the committee:

1. To conduct a comprehensive analysis of the situation, considering the root causes of the recent instability in the securities market;

2. initiatives to raise investor knowledge;

3. Look into any regulatory lapses that may have occurred in handling the alleged violation of securities laws in connection to the Adani group or other businesses;

4. Make recommendations for strengthening the legal and regulatory framework and ensuring adherence to the current framework for investor safety.

The Supreme Court ordered that the committee deliver its findings to them in a sealed cover within two months.

DY Chandrachud, the Chief Justice of India (CJI), and Justices PS the Securities and Exchange Board of India (SEBI) is already looking into the issue and will continue its investigation, a bench made up of the Chief Justice of India (CJI), DY Chandrachud, Justices PS Narasimha, and JB Pardiwala noted.

However, the Court ordered that as part of the investigation, SEBI shall also look into possible violations of Securities (Contract) Regulation Rules Rule 19A (related to maintenance of minimum public shareholding), potential failures to disclose transactions with related parties and other information that concerns related parties, and potential stock price manipulation.

According to the Court, the SEBI is required to keep the court informed of its progress and to update the expert group on the investigation.

As well Additionally, it was made clear that the committee's formation won't affect SEBI's investigative procedures' impartiality.

SEBI has also been instructed to swiftly wrap up its investigation within two months and to submit a progress report. Additionally, the Court has ordered SEBI to report to the expert group on the actions it takes to carry out its investigation and follow up on its directives.The order from today has also released the ancillary directives listed below:

The expert committee must receive all necessary material, according to a request made to the SEBI chairperson;

The relevant Union government agencies must work with the committee;

For its work, the committee may request advice from outside experts;

The chairman will set the committee members' compensation, which will be paid for by the union government; A senior official who will serve as a nodal officer and provide the committee with logistical support must be proposed by the Union Finance Minister.

The Union government will cover all of the committee's costs.

The decision was made in response to four petitions concerning a recent report by short-seller Hindenburg Research that alleged stock price inflation fraud on the part of the company.

The Adani Group reportedly experienced losses totaling $100 billion as a result of the report, which caused the share values of several Adani companies to decline.

In his petition, attorney Manohar Lal Sharma urged the SEBI and the Union Home Ministry to launch an investigation and file a First Information Report (FIR) against Nathan Anderson, the founder of Hindenburg Research, and his friends in India. Sharma also submitted a request for a gag order to prevent media reports about listed companies, such as the Adani group of companies, until after they have been submitted to and confirmed by the SEBI.

In his second petition, attorney Vishal Tiwari demanded that a committee directed by a former judge of the supreme court investigate the Hindenburg report. Tiwari also requested the formation of a special committee to supervise a procedure for approving loans greater than 500 crores. He also asked for a commission led by a retired Supreme Court judge to investigate the Hindenburg Research report.

Dr. Jaya Thakur, a leader in the Congress, filed a plea that, in addition to calling for the State Bank of India (SBI) and the Life Insurance Corporation (LIC decision)'s to purchase shares of the Adani group of companies at purportedly inflated prices has been questioned by the Adani group of companies.

The bench had expressed concern during the case hearing regarding the fact that Indian investors had incurred losses totaling several lakh crores.

The Securities and Exchange Board of India (SEBI), according to the Central government, is fully prepared to handle the report's consequences.

The Central government's proposal for the next steps in the case was rejected by the Supreme Court last month as its reserved judgement, saying it would instead establish a committee on its own.

The Central Government was criticized by the Court for claiming that the report had no effect on the market and for making it plain that it would not name a sitting judge to the committee to look into the matter.

Relevantly, the bench had previously stated that it would not impose any restrictions on the media's ability to report on such financial events.

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