Hindenburg, a well-known US short-seller, said major listed companies in the group controlled by billionaire Gautam Adani had “substantial debt”, which has put the entire group on a “precarious financial footing”. , Photo Credit: AP
The Supreme Court on Friday asked the Securities and Exchange Board of India (SEBI) and the government to build on the existing regulatory framework to protect Indian investors, who are mostly middle class and have lost several lakh crore rupees in the last two years. . US-based short-seller firm weeks after Hindenburg Research published a report after the downturn in the Adani Group Shares,
Assuring SEBI that it does not intend to go on a “witch-hunt” and is more interested in an ‘open dialogue’, a three-judge bench headed by Chief Justice of India DY Chandrachud asked the Indian investors and highlighted the need to protect them from such sudden market fluctuations in future.
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“How do we ensure the safety of Indian investors? Typically, this may be on a smaller scale, but reports in newspapers say that the total loss to Indian investors in terms of investor value could go into the range of several lakh crores. SEBI.
Chief Justice Chandrachud said the stock market is no longer a place to invest only for “high net worth investors”.
“It is also now a place where a broad spectrum of the middle class is investing because of changes in the financial and tax regime… Everyone is in the market now. Circuit-breakers are needed here, as you would in other sectors. I do,” the CJI told Mr Mehta.
The Solicitor General said the market plunged on “something”, outside the jurisdiction of SEBI.
“That report [Hindenburg] was the trigger point,” Mr Mehta said.
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“The stock market is completely driven by emotions… What we want to see is whether we have a robust mechanism in place to protect Indian investors… Capital is moving freely, money is flowing in and out of India is… how do we ensure that what happened does not happen again in future?” Chief Justice Chandrachud said.
On Mr Mehta’s submission, the court recorded that SEBI was “closely monitoring the situation and continues to do so”. The Supreme Court in its order clarified that its observations should not be construed as a reflection on SEBI or other statutory authorities.
‘ThreadBare Analysis’
The court asked SEBI to submit a note by Monday detailing the legal and factual aspects of the current regulatory framework for the securities market. The market regulator may also give a “threadbare analysis” of its strengths and even suggest whether it needs to develop more strengths to deal with the “new world” of free flow of capital. Is.
If the Center so desires, the court said it may also consider constituting an expert committee consisting of domain experts in banking and securities, along with a former judge, to act as a “wise guiding force”.
The court made it clear that it did not want to encroach on the policy domain. It will tread carefully, keeping a watchful eye against any upheaval in the stock market.
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The court listed the matter for February 13.
The bench was hearing separate petitions filed by advocates Vishal Tiwari and ML Sharma for investigation Hindenburg Research Report,
Mr Sharma has accused the short-seller firm of deliberately releasing the report just before Adani Group’s ₹20,000 crore follow-on public offer. He also questioned why SEBI did not suspend trading in short-selling stocks to protect investors.
“They made billions of profits by killing the citizens of India. However, SEBI did not suspend trading in stocks, especially those belonging to Adani group companies and allowed short-sellers to exploit innocent investors,” Mr Sharma had alleged.