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Navigating Market Waves: Sebi Closes In on Adani Probe, Investors Anticipate Regulatory Safeguards!

In a significant development, the Securities and Exchange Board of India (Sebi) informed the Supreme Court on Friday that it will not seek an extension to conclude its investigation into the Adani Group. The conglomerate has been under scrutiny for over 10 months, facing allegations of stock manipulation fraud and accounting irregularities. Solicitor-general Tushar Mehta, representing Sebi, revealed during the hearing that investigations into 22 out of 24 specific issues related to the Adani Group have been completed, signaling a potential resolution to the probe.

The comment made by Sebi suggests a possible readiness to close the investigation, though the regulator mentioned that no specific time limit could be set for resolving the remaining two outstanding issues. The timing for revealing the present status of the investigation was not disclosed by Sebi.

The Supreme Court had mandated Sebi on March 2 to investigate whether the Adani Group violated public shareholding rules to manipulate share prices. Additionally, a six-member panel was appointed to assess factors contributing to the volatility in share prices and evaluate any regulatory lapses related to securities rules contravention by the Adani Group or other companies.

In May, the expert committee reported that it found no regulatory failure concerning Adani Group’s stock rallies, and Sebi had not uncovered any violations in the alleged money flows from offshore entities into the conglomerate. In August, Sebi submitted a status report indicating the completion of investigations in 22 out of 24 issues, awaiting information from regulators in various tax haven jurisdictions.

Chief Justice of India D.Y. Chandrachud questioned Sebi on its efforts to protect investors affected by the Adani group’s stock market downturn earlier in the year, triggered by Hindenburg Research’s damaging allegations. The court raised concerns about extreme market volatility and sought information on Sebi’s plans to mitigate such fluctuations that impact investors.

Mehta responded, stating that action had been taken against short-sellers based on identified instances. He expressed Sebi’s non-objection to the recommendations of the expert committee for strengthening regulatory mechanisms, indicating that these recommendations are under consideration and have been accepted in principle.

The three-member bench, consisting of the Chief Justice and Justices J.B. Pardiwala and Manoj Misra, reserved its order on the matter while hearing a batch of petitions related to the allegations against the Adani Group made by Hindenburg.

During the proceedings, the bench cautioned Sebi against relying solely on newspaper reports in its investigation and responded to advocate Prashant Bhushan’s claim that Sebi’s probe lacked credibility. Bhushan highlighted a discrepancy in examining around 14 foreign portfolio investors (FPIs) linked to the conglomerate due to an amendment in FPI guidelines.

One of the petitions before the apex court sought contempt proceedings against Sebi, alleging a violation of the investigation timeline and the delayed submission of the report on the Adani group’s stock price manipulation allegations.

As the regulatory saga unfolds, investors eagerly await clarity on the conclusion of Sebi’s probe and anticipate potential regulatory measures to address market volatility.

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