Adani stock probe: Get to the nub of the matter
India’s stock market regulator was drawn into an unseemly swirl of suspicions raised by US-based Hindenburg’s report of 24 January that alleged the Adani Group was a “corporate con" while accusing it of share-price manipulation for dubious gains, among other things, all flatly denied by Adani. The Securities and Exchange Board of India (Sebi) recently proposed tighter ownership disclosure norms for foreign portfolio investors (FPIs), calibrated by risks entailed by concentrated holdings in very few firms—as some FPIs have had in Adani companies, placing them in the eye of this storm.
On Monday, Sebi responded to the report submitted on 6 May by a Supreme Court-appointed panel of experts tasked partly with looking for regulatory gaps in aid of an explanation for the volatility that beset Adani stocks after the US short-seller struck. In a court filing, Sebi rejected the panel’s call for time-bound probes, citing infeasibility, but what caught market attention was its defence of a rule tweak implicated by the 6 May report in a data fog around efforts to probe Adani.
In Hindenburg’s portrayal, even the ‘free float’ shares of major Adani firms were held by the promoter family—via an elaborate maze of financial interests abroad—to an extent that enabled their market prices to be rigged upwards, so that debt could be raised against self-inflated assets. While these allegations met counter-charges of ill-intent by Adani, they held resonance with stock watchers left agape by the group’s listed companies soaring to trade at hundreds of times their earnings before this January’s crash.
Stock upshoots reflect strong demand, but whether related parties were behind it depends on the identity of ultimate beneficiaries. The expert
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