India watchdog probes short-seller's allegations about Adani

The logo of the Adani Group is seen on the facade of its Corporate House on the outskirts of Ahmedabad, India, 27 January 2023.

India's markets regulator on Monday told the country's top court it was looking into the allegations made against the Adani Group by US-based short-seller Hindenburg Research in a critical report, a court filing seen by Reuters showed.

The Securities and Exchange Board of India (SEBI) also said it was looking into the market activity immediately before and after Hindenburg published its report on Jan. 24, the filing said.

Led by billionaire Gautam Adani, Adani Group's seven listed companies have together lost about $120 billion in market value since Hindenburg's critical report, which included allegations of improper use of offshore tax havens and stock manipulation, Adani Group has denied the allegations.

Earlier on Monday, India's Adani Group sought to reassure investors, saying its business plans were fully-funded, its cashflows strong and it remained confident of delivering attractive returns to shareholders.

SEBI has been examining trade patterns and any potential irregularities in the $2.5 billion share sale of flagship company Adani Enterprises ADEL.NS that the Adani group was forced to cancel due to the plunge in its shares, Reuters has previously reported citing sources.

SEBI confirmed the existence of the investigation for the first time in its Supreme Court filing.

"SEBI is already enquiring into both, the allegations made in the Hindenburg report as well as the market activity immediately preceding and post the publication of the report," the regulator said in the filing, adding the matter was in early stages of examination.

"SEBI is strongly and adequately empowered to put in place regulatory frameworks for effecting stable operations and development of the securities markets," it added.

SEBI's filing to the Supreme Court came in response to two separate public interest cases that raised concerns about investor protection during market volatility caused by the short seller's report.

SEBI said the events that were the subject matter of these cases related to "one set of entities in the market and have not had any significant impact at the systemic level."

"The entity level issues that have arisen have had a significant impact at the entity level and warrant detailed examination by the regulator," the regulator said in the filing.