Supreme Court Clears Adani Group from Further Investigations, Eases Regulatory Concerns

In a significant development, the Supreme Court of India ruled on Wednesday that the Adani Group is not required to undergo additional investigations beyond the ongoing scrutiny by the market regulator. This decision brings substantial relief to the conglomerate, which had faced allegations of wrongdoing from a U.S. short-seller.

The Securities and Exchange Board of India (SEBI) had been investigating the Adani Group, led by billionaire Gautam Adani, following Hindenburg Research’s January 2023 claims of improper use of tax havens and stock manipulation. Despite the Adani Group denying these allegations, Hindenburg’s report had led to a $150 billion reduction in its stock market value. While recent backing from bankers and investors had restored some investor confidence, the Hindenburg saga and ongoing regulatory scrutiny continued to impact the group’s business dealings and reputation.

The Supreme Court, overseeing the SEBI probe, asserted its authority to transfer investigations but concluded that the current situation did not warrant such a move. This verdict indicates that there will be no additional regulatory or legal risks beyond the ongoing SEBI investigation.

Following the court’s decision, shares of Adani companies experienced an increase ranging from 1% to 7%, reflecting renewed investor confidence.

In response to public interest litigants, the court also ruled against ordering changes to the country’s disclosure rules for offshore funds. Hindenburg had alleged that Adani’s offshore shareholders were being used to violate SEBI rules, although the company insisted on compliance with all laws.

Billionaire Adani expressed his satisfaction with the court’s judgment, emphasizing that truth has prevailed, and the group’s contribution to India’s growth will persist. Analysts, including Deven Choksey, Managing Director of KRChoksey Shares and Securities Pvt Ltd, anticipate increased global investor confidence in the company’s shares post this verdict.

SEBI, which had previously informed the Supreme Court of its intent to take appropriate action based on investigation outcomes, now has three months to complete its inquiries. Earlier reports by Reuters had highlighted SEBI’s discovery of technical violations by Adani group in disclosures and offshore fund holdings.

Despite these technical breaches, the court affirmed that the current regulatory framework does not suffer from irregularities or illegality, signaling that no intervention is required. This decision aligns with SEBI’s recent efforts to tighten disclosure rules, aiming to prevent the misuse of offshore funds to circumvent public float regulations.