‘Not proven’ at this stage: SC panel on Adani-Hindenburg

Indian stock market laws require a listed company to have a minimum public shareholding of 25% in order to have free float available for price discovery of shares. “Even the fundamental rules of evidence would require a conclusion as to whether an allegation is ‘proved’, ‘disproved’ or ‘not proved’. At this stage, the factual matrix would place the case within the ambit of ‘not proved’. appears to hold – the regulator has not been able to prove that its suspicions can be translated into a concrete case for prosecution for alleged violations,” said the report reviewed by HT.

To be sure, the 173-page report carefully adds a caveat that its findings are based on SEBI’s “prima facie position”, which has decided to further probe alleged violations of MPS norms by some Adani companies . -Sailor Hindenburg Research Report released on 24 January.

On May 17, the apex court gave SEBI time till August 14 to complete the probe into the allegations leveled by the Hindenburg Report, which alleged “brazen accounting fraud” and “stock manipulation” by the Gautam Adani-led group Was. Although the group dismissed the report as “unrefined” and “maliciously mischievous”, it triggered a rout of Adani Group shares, which lost more than $140 billion in days and led to the cancellation of a Forced to 20,000 crore share sale in the flagship of the group.

The six-member panel, headed by retired Supreme Court judge AM Sapre, was constituted by the court on March 2. The panel submitted its report to the CJI-led bench last week. Giving more time to SEBI for the probe, the court on Wednesday directed sharing of the report of the panel with SEBI and the PIL petitioners to “assist them in further deliberations” when the matter comes up for further hearing on July 11. to be enabled”. The panel presented its findings with regard to the Adani-Hindenburg row under three major heads – alleged violation of MPS norms, disclosure of related party transactions as per law and alleged stock price manipulation.

While Sebi launched a probe in October 2020 to look into possible violation of MPS norms by Adani companies using 13 foreign entities, the regulator suspected that some Adani companies could be “fronts for promoters”, the panel said. said, it has “drawn a blank” so far and has not reported any offense under the SEBI Act or for alleged violations of the Foreign Exchange Management Act (FEMA). SEBI’s efforts to seek information have also been viewed as counterproductive as they sought adequate justification for accepting such a request, which the panel termed a “chicken and egg” situation.

“In the present case, it appears that SEBI has not been able to make out a case, and the non-make out case is presented as a prima facie position, which cannot be confirmed unless unless further investigation is conducted. In any prosecution of proceedings, whether civil or criminal, the presentation of a prima facie case is the responsibility of the plaintiff or the prosecutor. Once the prima facie case is made, the burden falls on the accused is,” the panel said.