It is difficult to categorically welcome the Supreme Court’s order to set up a committee to probe possible regulatory failure to deal with allegations of flouting rules in the securities market by Adani group companies. The Court has done well by clarifying that the constitution of the committee will not take away from the Securities and Exchange Board of India (SEBI) the powers and responsibilities to continue its investigation. Besides this, it has said that SEBI should also probe the allegation that companies failed to maintain minimum public shareholding or did not disclose related party transactions. To the extent that it holds the regulator to account for its claim that it has already seized on the matter, it also expands its scope to explicitly address whether funds controlled by related parties are used to buy stock. This order is quite welcome, was done to manipulate the prices. However, a pertinent question is whether there is a need for a committee headed by a former Supreme Court judge. SEBI has been asked to share its findings with the panel, but it is doubtful whether the committee can refrain from going into the allegations itself before confirming or regulating regulatory failure. The cause could have been better served if the court had chosen to monitor SEBI’s probe by seeking a progress report. And to assess the final result, the help of experts can be taken, if necessary. The other aspect of the panel’s work – suggesting measures to strengthen the regulatory framework – could have been left to the legislature. Also, it is disappointing that the Court has sought the report of the panel in a sealed cover. The fate of similar committees, the one on Pegasus, for example, does not inspire confidence regarding the outcome.
The order also asks the committee to find out the reasons that led to the volatility in the market. The severe losses suffered by retail investors following the Hindenburg disclosures should not become a red herring to deflect attention from the conduct of the companies. Investor protection is one of the functions of SEBI, but it is equally true that no measure can be a guarantee against sensitive reaction to the developments of market forces. Stock market investments have an inherent and inherent risk, and this is addressed through various means from a regulatory perspective – setting norms for setting upper and lower limits on daily price movement and mandating disclosure. It may be expedient for the Adani group – and the government, which also wants the controversy to end soon – to highlight the loss to investors so that a quick recovery can be made by pinning the blame on an alleged conspiracy against the country and its corporate champions. acquittal can be ensured. a hostile short-seller; But the focus of the court should be on the conduct and independent functioning of SEBI, which can be protected to protect investors from market manipulation.