In a striking development on the regulatory front, the Securities and Exchange Board of India (SEBI) has found itself amidst a significant investigation involving the Adani Group. Recent revelations have emerged that a cluster of twelve offshore funds, all stakeholders in the conglomerate, are under the scanner for not adhering to stipulated disclosure regulations and for overstepping the boundaries of investment limits. This information has been brought to light by two individuals privy to the matter on April 22, who opted to remain anonymous because they were not authorized to divulge details to the media.
The discovery of these irregularities can be traced back to a report by Reuters in August of the previous year, which first highlighted the SEBI’s uncovering of discrepancies related to mandatory disclosures by listed entities and the restriction on holdings by foreign funds. The investigation’s depth grew when SEBI began probing into the relationship between the Adani Group and one of the implicated funds. The query tackled the possibility of the fund operating in concert with the prominent shareholders of the Adani conglomerate—a notion that Adani has firmly repudiated in the past.
In terms of action, the SEBI issued notices to the offshore investors connected with the Adani Group earlier this year. The notices called upon the funds to clarify their stance regarding both the lack of proper disclosures and their crossing of investment thresholds. “The offshore funds were reporting their investment in Adani Group companies at individual fund level. Regulator wanted the disclosure of holding at offshore fund group level,” elucidated the first source who was engaged in these matters.
In a bid to resolve the emerging conflict, a majority, specifically eight of these offshore entities, have come forward to SEBI with a proposition. They have filed a written request to settle the alleged charges by consenting to pay an ascertained financial penalty. It is noteworthy that this agreement would be arranged without the funds admitting to any wrongdoing.
As the story unfolds, neither the regulatory body SEBI nor the Adani Group has offered any immediate comments in response to emailed requests. With both parties maintaining their silence, the ongoing scrutiny continues to evoke inquiries about the nuances that govern the financial and investment landscapes.
Indeed, the issue has caught the attention of national politics as well, with the Congress party weighing in on the responsibility of SEBI to act without fear or favor, highlighting that SEBI should not emulate the State Bank of India’s (SBI) reputedly hands-off approach when it comes to high-stakes entities. Additionally, legal opinions have reaffirmed SEBI’s autonomy and authority, further cemented by the Supreme Court’s support for an unfettered investigation, emphasizing that judicial intervention should be limited unless necessary.
The seriousness with which the Supreme Court has addressed the matter is evident. The apex court has upheld the SEBI’s rigorous investigation, particularly in the wake of controversy involving the scrutinized Hindenburg report, shifting the focus squarely onto corporate conduct and the importance of meticulous regulatory compliance.
Moreover, the dynamics surrounding short-selling practices also face intense regulatory supervision, as asserted by the Solicitor-General in statements to the Supreme Court. In a financial ecosystem that continues to expand and convolute, these developments signify a firm commitment by the Centre and SEBI to oversee and regulate market intricacies effectively.
As the landscape of financial markets remains ever-volatile and susceptible to the complexities of global investment flows, the implications of SEBI’s ongoing probe into the disclosure practices of offshore funds linked to the Adani Group enforce a stern message: the integrity and transparency of market disclosures are paramount and will be tenaciously safeguarded by the regulatory watchdogs of India’s economic domain.
