SC constitutes expert panel, directs SEBI to probe Adani Group
In a massive blow to the Adani Group, the Supreme Court has directed the Securities and Exchange Board of India (SEBI) to investigate the allegations leveled against the conglomerated by Hindenburg Research. The court asked the regulator to submit the report within two months. It has also formed a six-member expert committee to take a look at the regulatory mechanism.
Why does this story matter?
Hindenburg Research accused Adani Group of accounting fraud and market manipulation earlier this year. The report led to the conglomerate's stocks tanking for consecutive trading sessions. Supreme Court got involved after four petitions concerning the matter reached the court. The court, at the time, had observed that Indian investors suffered a massive loss due to Adani Group's performance in the market.
The committee will be headed by Justice (retd.) AM Sapre
The court asked SEBI to probe if there are violations of the Securities Act, whether there has been a failure to disclose related party transactions, and whether the conglomerate violated norms of manipulation of stock prices. The regulator also has to appraise the expert committee about its findings. The committee will be headed by Justice (retd.) AM Sapre.
Who are the members of the committee?
The members of the expert committee formed by the Supreme Court include OP Bhat, Justice (retd.) Devdhar, KV Kamath, Nandan Nilekani, and Somasekharan Sundaresan. The bench that pronounced the order comprised CJI DY Chandrachud, Justice PS Narasimha, and Justice JB Pardiwala.
What are the responsibilities of the panel?
The court asked the committee to assess the factors that led to volatility in the securities market in the recent past. The committee is also responsible for suggesting measures to strengthen investor awareness and strengthen the statutory and regulatory framework concerning investor protection. Specifically, the court directed the panel to look into if there has been a regulatory oversight in the Adani issue.
The Court rejected the Centre's recommendations for the committee
The Supreme Court first decided to form an expert committee last month. The Central government agreed to the formation of the committee. However, Solicitor General Tushar Mehta requested the court to ensure the committee's formations do not create an impression that there are regulatory inadequacies. Notably, the court rejected the Centre's sealed cover with names for inclusion in the committee.
