SC Panel on Adani Issue

In News

• The Supreme Court recently formed a five-member expert committee to investigate the possibility of  regulatory failure in the Hindenburg Adani saga.

About

• The supreme-Court formed a committee headed by former apex court judge, Justice Abhay Manohar Sapre to assess  the regulatory framework.
• The scope of the committee is to
  • provide an overall assessment of the situation, including the relevant factors which led to the volatility in the securities market 
  • suggest measures to strengthen Indian investor awareness
  • investigate any regulatory failure in dealing with the alleged breaking of rules  by the Adani Group of companies
  • suggest measures to strengthen the statutory and regulatory framework and secure compliance with the existing framework for the protection of investors.

Adani-Hindenburg saga

• In late January, Hindenburg Research, which specialises in short selling, published a report critical of the Adani group’s finances.
  • It said key listed companies in the group had “substantial debt” which has put the entire group on a “precarious financial footing”.
  • It accused Adani-led conglomerate of “brazen stock manipulation and accounting fraud scheme over the course of decades”.
• The report was released just ahead of a Rs 20,000 crore (USD 2.5 billion) follow-on public offer (FPO) by Adani Group’s flagship firm Adani Enterprises.
• Following the report, shares of Adani companies nose dived and later had a mild recovery.this resulted in
  • the seven listed firms loosing about half their market value – or more than USD 100 billion combined .The listed Adani firms now have a combined market value of USD 108 billion, versus USD 218 billion before Hindenburg’s report.
•  The Adani Group called off the Rs 20,000 crore FPO of Adani Enterprises Ltd (AEL) and said that it would refund the money to the investors.
• The setting up of the committee comes in the light of  Opposition joining hands to demand a probe either by a Joint Parliamentary Committee (JPC), or monitored by the Chief Justice of India, into the allegations of fraud and stock manipulation.

Source:TH