SC suggests expert panel to protect investors from Adani-like rout

India’s top court has said that it was not “casting aspersions on any regulatory framework” but “having a dialogue”.

New Delhi | Updated: 11 February, 2023 3:14 pm IST

The Supreme Court has asked the Centre and SEBI to tell it by Monday the steps needed to improve statuary and regulatory framework in order to protect investors from market volatility and suggested setting up an expert panel to examine the fallout of allegations of fraud against the Adani Group.

Hearing a petition, Chief Justice of India (CJI) DY Chandrachud said that the court doesn’t want to get into policy matters. “This is for the government,” he said.

The petitioner sought the top court’s intervention into the fallout of a report published by US-based short-seller Hindenburg Research which accused the port-to-energy conglomerate of “pulling the largest con in corporate history” by way of stock manipulation and accounting fraud.

The damning report wiped out crores of rupees in investor wealth and promoted a fierce attack by Opposition parties on the Central government.

During the hearing, a bench of CJI Chandrachud, and justices PS Narasimha and JB Pardiwala expressed concerns over the Adani stocks rout and observed that there was a need for “examining and strengthening of the regulatory mechanisms to ensure that Indian investors are protected against a certain volatility, the kind of which was witnessed in the recent few weeks”.

ALSO READ: Adani hires top New York firm to fight back Hindenburg allegations

“We have suggested an expert committee for the overall situation and examination if the Government of India is interested in this exercise,” said CJI Chandruchud.

Representing the Central government, solicitor general Tushar Mehta said, “SEBI (Securities and Exchange Board of India) is on top of the issue and looking into the events, which followed a certain report by a foreign entity, within existing robust regulatory mechanism”.

To this, the bench further said that the court was not “casting aspersions on any regulatory framework”. “We are having a dialogue on this aspect,” said CJI Chandrachud.

He also requested the solicitor general to present a brief note on the factual and regulatory situation.

In response, SG Mehta informed the court that he would present a proposal after consulting with the finance ministry, the SEBI, and other ministries.

It also told the SG to inform Sebi and its officers that it would not indulge in any witch-hunting exercise. It also termed the PILs filed by advocates Vishal Tiwari and ML Sharma as not so well-informed and told them firmly to not use the proceedings before the court to affect market sentiments. “We are proceeding with great circumspection in this matter,” it said.

Further clarifying its stance on the issue, the court said: “The observations of the court during the proceedings are neither intended nor should be construed to be any reflection on the discharge of statutory functions by the SEBI or any regulatory body.”

Billion Gautam Adani — who heads the Adani Group — has lost almost half of his fortune in a stock crash triggered by allegations of fraud by Hindenburg. Adani has denied all allegations and has reportedly hired a top law firm in New York to sue the activist investor firm.

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