Sebi's process review delays Adani settlement pleas

Mumbai: India's markets regulator has kept in abeyance pleas by the Adani group and its offshore investors to settle a raft of regulatory charges until internal processes are reviewed, two sources with direct knowledge of the matter said.

The Securities and Exchange Board of India (Sebi), where a new chief took charge in March, is reviewing rules of settlement pleas, the regulator said last month. A lack of uniformity in the settlement process and unclear rules on the nature of penalties imposed has prompted the review, the first source said.

The review could take three months after which the Adani pleas will be taken up under new processes, said the second source, with direct knowledge of the matter.

Under Sebi's settlement process, investors and market participants pay a monetary fine or agree to regulatory directions without admission or denial of guilt.

The sources declined to be identified as the status of investigations and pleas are private.

Sebi and the Adani group did not respond to e-mails seeking comment.

Sebi began investigating the Adani group in 2023 after US-based shortseller Hindenburg alleged improper use of tax havens and stock manipulation by the group, setting off a $150 billion sell-off despite the conglomerate's denials of wrongdoing. The shares have since recovered.

Gautam Adani and top executives of Adani Green are also facing indictment by the U.S. authorities alleging that they paid bribes to secure Indian power supply contracts and misled U.S. investors during fund raises. On Monday the company informed stock exchanges in India that an independent review of the indictment did not find any non-compliance of law by Adani group officials.

In India, Sebi was investigating 24 charges against group companies and its offshore investors, it said in a filing to the Supreme Court in 2023.

Thirty Adani group entities have applied to settle some of these regulatory charges, said the second source.

The Adani pleas are among over three hundred pending applications for settlement but are the most prominent being reviewed, the source added. Sebi has charged Adani Enterprises , Adani Ports , Adani Energy and Adani Power of wrongfully categorising certain shareholders as public, according to financial statements filed by these four companies.

Twenty-six other Adani group and related entities have been charged with categorizing shareholdings by three Mauritius based offshore funds as public shareholdings when these funds were linked to Vinod Adani, brother of Adani group Chairman Gautam Adani, the source said.

Under Indian law, at least one-fourth of a listed company's shares should be held by public shareholders.

These Adani entities had sought to pay a monetary fine for settling the market infraction, without proposing to recategorise the shareholding, the second source said.

“For the settlement to proceed, Adani group companies will have to re-categorise the shares held by these funds as non-public shareholding,” said the other source.

Separately a dozen offshore funds invested in Adani group companies were charged with violation of disclosure rules and in breach of regulatory prescribed investment limits, Reuters had reported last year.