Adani-Hindenburg: The apex court has endorsed regulatory independence

livemint.com:

In its decision of 3 January on the matter of an Adani Group probe in the wake of Hindenburg’s allegations, the Supreme Court (SC) upheld trust in the regulatory system under the Securities and Exchange Board of India (Sebi), emphasizing its commitment to financial transparency and market integrity, by endorsing Sebi’s regulations. It dismissed conflict-of-interest concerns and asked the market regulator to conclude its investigation of the remaining parts within three months.

This issue has been a test—not just for Adani, but more of Sebi’s supervisory competence and regulatory autonomy. The SC confirmed the inadequacy of relying on newspaper articles or reports from third-party organizations to challenge an investigation conducted by a specialized regulator like Sebi.

The court highlighted that while reports from independent groups or investigative journalists may serve as initial inputs for Sebi or an expert committee, they cannot be considered conclusive evidence of any shortcomings in Sebi’s probe. The SC’s stance underscores the importance of recognizing Sebi’s authority and competence.

The SC also directed Sebi to scrutinize any “infractions" by Hindenburg, making it clear that we must trust the Indian regulatory system over the claims of a US-based short-seller. This validation of Sebi’s role sends a positive signal to investors, underscoring the existence of a robust regulatory framework designed to protect the interests of all stakeholders.

This judgement marks a significant stride towards fostering a fair and transparent business environment, instilling investor confidence and preserving the integrity of Indian financial markets. Moreover, we must recognize that with each instance of market volatility or