Adani row: SEBI disagrees with the recommendations of the expert committee

New Delhi. Capital markets regulator Sebi told the Supreme Court on Monday in the Adani case that the change in its rules made in 2019 did not make it difficult to identify the beneficiaries of funds received from abroad and action would be taken if any violation was found. The Securities and Exchange Board of India (SEBI) said it has continued to tighten rules related to beneficial ownership and related-party transactions. This is a key aspect in the allegations of rigging the share price of Adani group companies. The court-appointed expert committee had said in its interim report that it did not find any evidence of wrongdoing in industrialist Gautam Adani’s companies and also did not see any regulatory failure.

The committee, however, noted several amendments to Sebi’s regulations between 2014 and 2019, saying these hampered the regulator’s ability to investigate and probe alleged violations in money flows from foreign institutions. Without mentioning the status report of its probe into the allegations against the Adani group, Sebi in its latest affidavit submitted in the court said that it does not agree with the expert committee about the difficulty in identifying the person with pecuniary interest behind the foreign fund. . “There is no bar on SEBI to investigate any violation of any securities law…,” the market regulator said.

The regulator said it does not agree with the views of the expert committee and action will be taken if any violation is found. A bench headed by Chief Justice DY Chandrachud will hear the Adani-Hindenburg matter on Tuesday. American financial research and investment firm Hindenburg in January accused the Adani group of fraud in the books and manipulation of stock prices, as well as improper use of foreign units. Following these allegations, there was a big fall in the shares of the group. Thereafter, the Supreme Court had constituted an expert committee on March 2 to probe disclosures of related party transactions and manipulation of share prices. The committee was to deal with SEBI’s probe into foreign entities investing in the Adani group. The regulator was first asked to complete the probe in two months and then extended it by three months till August 14. In its affidavit, the market regulator said that in fact the 2019 rule changes have made the disclosure requirement related to beneficial ownership more stringent.

In a 43-page affidavit, Sebi opposed the expert committee’s recommendation to ‘enact in law’ a specific time frame for the regulator to complete its probe. According to the regulator, setting such a time limit may compromise the quality of investigations, create hurdles and lead to legal disputes. In the affidavit, SEBI has given its views on the recommendations of the expert committee on issues such as effective enforcement policy, judicial discipline, strong settlement policy, required timelines, monitoring and market administration measures, among others.

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