The request made by the Securities and Exchange Board of India (SEBI) to the Supreme Court to grant more time to complete its investigation into the allegations against the Adani Group is of a piece with the dillydallying the regulator had done while addressing the charges from the very beginning. SEBI made the request to the court which had directed it to undertake the investigation in two months at the end of that period.
The allegations relating to corporate misdemeanour and manipulation of stock prices, made by US short seller Hindenburg Research, had led to a crash in the shares of the Adani companies. In response to a PIL, the Supreme Court set up an expert committee to probe the causes of the crash and related factors. SEBI’s inability to provide the necessary data may make it difficult for the committee to finalise its report, too. Going by SEBI’s statement, it is clear that its investigation will not reach early conclusion.
SEBI told the court that it wants at least six months, if not 15, to compete the investigation. It said it had “crystallised a prima facie view” on certain issues but needs more time because of the complexity of the issues involved. The argument that the country’s market regulator would need such a long time to collect data is not convincing. Hindenburg, whose report is based on the very data that SEBI itself has access to or should have put together and studied as the regulator, has already given it a very specific set of transactions to look into. SEBI should have actually begun investigations on the complaint made by Trinamool Congress MP Mahua Moitra in 2021 itself, long before the Hindenburg report and the Supreme Court’s intervention. Yet, it says it needs more time now.
SEBI makes a poor comment on itself if it tells investors who have lost huge amounts of money to wait for such a long time to know the reasons for their losses. Investigating agencies usually prepare interim reports in situations where final conclusions take time to be formed. These could be done without prejudice to and without affecting the final outcome. SEBI has not done this. It is likely that it did not want to undertake a proper investigation. This is not surprising because one charge against SEBI was that it was soft on the Adani Group because it is politically connected. Delaying the investigation for a prolonged period will push the matter out of public focus and diminish public interest in it. But the credibility of India’s financial markets, corporate governance processes and its regulatory system will certainly take a knock. The Adani Group has claimed that SEBI’s application showed there was no conclusion of its wrongdoing. That is revealing.