More than two and a half years after US-based Hindenburg Research had accused Gautam Adani and the Adani Group of stock manipulation and accounting irregularities, the Securities and Exchange Board of India (SEBI) has given a clean chit to the airports-to-power conglomerate.
Following the order, Gautam Adani issued a statement, saying transparency and integrity have always defined the Adani Group.
In its final order issued on Thursday evening, the market regulator dismissed the allegations levelled by Hindenburg, and disposed off the proceedings in what is a vindication of sorts for the Adani Group.
"Having considered the matter holistically, I find that the allegations made against Noticees in the SCN (show cause notice) are not established. Considering the above, the question of devolvement of any liability on Noticees does not arise and hence the question of determination of quantum of penalty also does not require any deliberation," SEBI's whole-time member Kamlesh Chandra Varshney said in the order.
The noticees were Adani Ports and Special Economic Zone, Adani Power, Adani Enterprises, Rajesh Adani, Gautam Adani, Jugeshinder Singh (group CFO), Milestone Tradelinks and Rehvar Infrastructure.
The short seller Hindenburg had released a report in January 2023 against the Adani Group. It had alleged that Adani Enterprises and Adani Power Mundra were funded by Milestone Tradelinks and Rehvar Infrastructure through Adani Infra Limited in 2020-21. Hindenburg had even questioned the original source of funds of Milestone and Rehvar.
The regulator said it carried out a detailed investigation to ascertain any possible misrepresentation or misstatement in the financial statements and attempts to circumvent various SEBI provisions from 2018-19 to 2022-23.
The investigation found that the alleged funds that were transferred and loans given were repaid back in full, along with the interest.
According to SEBI, the transactions impugned by the show cause notice were in compliance with prevailing law in force at the time the transactions were undertaken and cannot be claimed as being violative of the LODR (Listing Obligations and Disclosure Requirements) Regulations.
"Plain reading of the LODR Regulations reveals that transactions between a listed company with unrelated party is not covered within the definition of 'related party transactions' as it existed during the time when impugned transactions took place," the order read.
The regulator said it can't make regulations that have a retrospective effect. Also, it said the facts of the case didn't meet the requirements of the definition of fraud.
According to SEBI, "the 2021 amendment to the LODR regulations is substantive amendment and as per accepted legal jurisprudence cannot apply to past transactions."
The Adani Group had always denied the allegations and this clean chit should remove some of the regulatory overhang over the group.
"After an exhaustive investigation, SEBI has reaffirmed what we have always maintained, that the Hindenburg claims were baseless," said Adani.
The Hindenburg report had led to a massive sell-off in shares of Adani Group companies, erasing almost $100 billion in market value at the time.
He said he deeply felt the pain of the investors who lost money because of "this fraudulent and motivated report."
"Those who spread false narratives owe the nation an apology."
He further stated that their commitment to India’s institutions, to India's people and to nation building remained unwavering.