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02/05/2023 Dev Prakash Politics Views 136 Comments 0 Analytics Video English DMCA Add Favorite Copy Link
It is better for sebi to be sure than sorry
The capital market regulator has sought more time to investigate the charges of stock price manipulation by the Adani group. However, this should not cause despair among people waiting for stern action against the group. Allegations are many, and the transactions and deals being investigated are complicated. The group has been under the constant scrutiny of various agencies, and the market regulators need to be more vigilant given the attention this case has received.

The SC-appointed six-member committee has been entrusted with investigating the affairs of the Adani group listed firms, their funding, related party transactions, etc., after short-selling firm Hindenburg came out with a scathing report against the group. The report highlighted several issues, including stock price manipulation, insider trading, and round-tripping. The group had been under the scrutiny of the government more than a decade ago for similar violations. Yet, the Hindenburg report revealed several new details, transactions and dealings. It has especially highlighted the role of Gautam Adani’s elder brother Vinod Adani in facilitating funding for the group in recent years.

Several ‘shell’ entities have been mentioned in the report, many of which came to be known through disclosures as recently as 2021. Many transactions mentioned in the reports are recent — two or three years old. Besides, Adani listed companies’ share prices took off for sky-high valuation during and after Covid-19. All these allegations need to be thoroughly investigated. The SC-appointed committee is just a couple of months old, and it is not a good enough time for a detailed investigation into allegations of such nature.

While seeking an extension of six months, the Sebi committee has listed the nature of the investigations requiring more time. It says that even in cases where they did not find prima facie violations, they need more time to back their findings conclusively. 
It has been reported that Sebi has been seeking details and documents almost every day from the Adani group, and on some days, officials have been summoned thrice on the same day. If you look at similar investigations in the past, whether the Reliance Petroleum Ltd or Rakesh Jhunjhunwala-Aptech Ltd case, they take time, and the closure of these cases could take years. For a conclusive investigation, asking for an extension of another six months is not entirely unjustified. The inquiry would be a litmus test for the country’s market regulator and regulatory robustness. And given the issue’s sensitivity, it is always better to be sure than be sorry.
                             

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