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NEW DELHI: Market regulator Sebi on Friday filed final status report in the Supreme Court on 24 investigations it had carried out pursuant to short-seller Hindenburg’s report that led to meltdown of shares of Adani group companies and said 13 of these probes related to the group’s alleged failure to disclose related party transactions.
Sebi informed the SC that of the 24 investigations, 22 are final and two are interim in nature. “The 22 final investigation reports as well as one interim investigation report are approved by the competent authority, In the remaining one matter, interim findings have been approved by the competent authority,” it said.
“In regard to the interim investigation reports, Sebi has sought information from external agencies/entities and upon receipt of such information, will evaluate the same with regard to the interim investigation report to determine future course of action,” it said.
A major part of Sebi investigations was the alleged failure on the part of Adani group companies to disclose related party transactions (RPT). A related party transaction could influence the profit or loss and financial position of an entity. Knowledge of an entity’s transactions, outstanding balances, including commitments, and relationships with related parties may affect assessments of its operations by users of financial statements, including assessments of the risks and opportunities facing the entity.
Sebi said it has finalized the investigations into 13 instances of alleged failure to disclose RPTs – Adani group companies with Adani Infrastructure management Services; between Krunal and Sunbourne in 2008-09 and subsequent transaction between Sunbourne and AEL; between Bardenia Trade and Investment Ltd with Adani Infra and loan transaction between Adani Infra and Adani Enterprises and Adani Power Mundra Ltd (APML); Rehvar Infrastructure and Milestone Tradelinks and Adani Infra as well as loan transaction between Adani Infra and Adani Enterprises and APML;
“Transactions with regard to PMC Projects; between Adani Power and Growmore Trade and Investment; Loan transaction between Emerging Market Investment DMCC and Adani Power Ltd; between Carmichael Rail and Port Singapore Holdings and Adani Mining Pte and Adani Global Pte in 2013-14-15; between Adani group and NQXT; awarding of coal supply contract to an opaque Singaporean entity controlled by former Adani group company director (Pan Asia) and over in-voicing; between Vakoder Investments and Adani Estates; and, audit qualifications in Adani Power for FY 2020-21.”
The scope of investigation into this alleged non-disclosure of RPTs was to ascertain allegations relating to possible material misrepresentations in financial statements, misstatement, attempt to circumvent extant regulation and fraudulent nature of transactions by listed Adani group companies under the SEBI Act, 1992 and three other securities regulations.
During the investigation, it had issued 90 summonses for personal appearance of Adani group officials and recorded 70 statements while examining approximately 33,550 pages of documents related to these transactions, Sebi said.
It said it had investigated two alleged cases of stock manipulation between March 1, 2020, to December 31, 2022. The investigations involved holistic analysis “in respect of alleged Prive Volume manipulations in Adani Enterprises, Adani Ports & SEZ, Adani Green Energy, Adani Transmission, Adani Power, Adani Total Gas and Adani Wilmar.
Sebi said it also analyzed the trading of FPI/Foreign Entities named in the Hindenburg report in the Adani group scrips on the allegation of manipulative wash trades or other forms of manipulative trades by the FPIs/foreign entities mentioned in the Hindenburg report. “Analysis of allegations relating to delivery based trades undertaken by the alleged entities in three Adani group scrips – Adani Transmission, Adani Enterprises and Adani Power – was also carried out,” it said.
Sebi also said it investigated whether the trading pattern (short positions) of certain entities in Adani group companies was unusual around the time of release of the Hindenburg report between January 18-31. It said interim findings have been approved but the regulator is awaiting information from external agencies/entities. “Sebi shall take appropriate action on the outcome of the investigations in accordance with law,” it said.
Sebi informed the SC that of the 24 investigations, 22 are final and two are interim in nature. “The 22 final investigation reports as well as one interim investigation report are approved by the competent authority, In the remaining one matter, interim findings have been approved by the competent authority,” it said.
“In regard to the interim investigation reports, Sebi has sought information from external agencies/entities and upon receipt of such information, will evaluate the same with regard to the interim investigation report to determine future course of action,” it said.
A major part of Sebi investigations was the alleged failure on the part of Adani group companies to disclose related party transactions (RPT). A related party transaction could influence the profit or loss and financial position of an entity. Knowledge of an entity’s transactions, outstanding balances, including commitments, and relationships with related parties may affect assessments of its operations by users of financial statements, including assessments of the risks and opportunities facing the entity.
Sebi said it has finalized the investigations into 13 instances of alleged failure to disclose RPTs – Adani group companies with Adani Infrastructure management Services; between Krunal and Sunbourne in 2008-09 and subsequent transaction between Sunbourne and AEL; between Bardenia Trade and Investment Ltd with Adani Infra and loan transaction between Adani Infra and Adani Enterprises and Adani Power Mundra Ltd (APML); Rehvar Infrastructure and Milestone Tradelinks and Adani Infra as well as loan transaction between Adani Infra and Adani Enterprises and APML;
“Transactions with regard to PMC Projects; between Adani Power and Growmore Trade and Investment; Loan transaction between Emerging Market Investment DMCC and Adani Power Ltd; between Carmichael Rail and Port Singapore Holdings and Adani Mining Pte and Adani Global Pte in 2013-14-15; between Adani group and NQXT; awarding of coal supply contract to an opaque Singaporean entity controlled by former Adani group company director (Pan Asia) and over in-voicing; between Vakoder Investments and Adani Estates; and, audit qualifications in Adani Power for FY 2020-21.”
The scope of investigation into this alleged non-disclosure of RPTs was to ascertain allegations relating to possible material misrepresentations in financial statements, misstatement, attempt to circumvent extant regulation and fraudulent nature of transactions by listed Adani group companies under the SEBI Act, 1992 and three other securities regulations.
During the investigation, it had issued 90 summonses for personal appearance of Adani group officials and recorded 70 statements while examining approximately 33,550 pages of documents related to these transactions, Sebi said.
It said it had investigated two alleged cases of stock manipulation between March 1, 2020, to December 31, 2022. The investigations involved holistic analysis “in respect of alleged Prive Volume manipulations in Adani Enterprises, Adani Ports & SEZ, Adani Green Energy, Adani Transmission, Adani Power, Adani Total Gas and Adani Wilmar.
Sebi said it also analyzed the trading of FPI/Foreign Entities named in the Hindenburg report in the Adani group scrips on the allegation of manipulative wash trades or other forms of manipulative trades by the FPIs/foreign entities mentioned in the Hindenburg report. “Analysis of allegations relating to delivery based trades undertaken by the alleged entities in three Adani group scrips – Adani Transmission, Adani Enterprises and Adani Power – was also carried out,” it said.
Sebi also said it investigated whether the trading pattern (short positions) of certain entities in Adani group companies was unusual around the time of release of the Hindenburg report between January 18-31. It said interim findings have been approved but the regulator is awaiting information from external agencies/entities. “Sebi shall take appropriate action on the outcome of the investigations in accordance with law,” it said.
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