SC on Adani Hindenburg

What are the Hindenburg Report Allegations ?

Hindenburg's Allegations: In January 2023, Hindenburg Research accused the Adani group of stock manipulation, accounting fraud, and using improper tax havens and shell companies to manage funds, significantly impacting the stock market.

They filed various petitions seeking a court-monitored investigation, citing implications for national security and the economy.

They also alleged that SEBI, the market regulator, was not competent or independent enough to conduct a fair and impartial probe.

Counter Arguments: The Adani group refuted the allegations, attributing them to false information and vested interests.

SEBI defended its competence and independence in handling the investigation.

What was SC’s verdict?

• The apex court refused to transfer the investigation from the Securities and Exchange Board of India (SEBI) to other bodies, affirming its confidence in SEBI's handling of the case.

• Also, SC instructed SEBI to utilize its investigative authority to determine if the Hindenburg report's short-selling actions violated laws, resulting in investor harm.

• The court held that the power to transfer investigation must be exercised in exceptional circumstances and not in the absence of cogent justifications.

• The Court deemed the Hindenburg report unreliable and aimed at influencing the market through selective and distorted information.

  • While upholding SEBI's integrity, the Court directed an expedited completion of SEBI's investigation within three months.

Which committee was formed in March 2023 after the Hindenburg allegations?

The Supreme Court formed the Justice Sapre Committee in March 2023 to probe potential regulatory failures after investors suffered significant losses due to market volatility following Hindenburg Research's allegations against the Adani Group for share price manipulation and accounting fraud.

What is short selling?

Selling a stock you do not own to buy at a lower price