Hindenburg report on Adani: SEBI requests Supreme Court for 6-month extension to complete probe

The Securities and Exchange Board of India (SEBI) filed an application before the Supreme Court on Saturday seeking an extension of six months to complete its probe into the controversy surrounding the Hindenburg Research report on the Adani Group of companies and allegations against the Conglomerate [Vishal Tiwari vs Union of India and ors]..In an order passed on March 2, the Supreme Court had allowed SEBI to continue with its probe. The probe was to be completed by May 2. This probe was in addition to the probe ordered by the top court by an expert committee headed by retired apex court judge, Justice AM Sapre..SEBI in its filed application filed on Saturday submitted that it would need another six months to complete the probe..SEBI also said that it has apprised the expert committee of the status, steps taken and interim findings in respect of the examinations and investigations carried out by it.In its application, the market regulator submitted that the 12 suspicious transactions cited in the Hindenburg report would need a rigorous probe of at least 15 months since those transactions are complex and have many sub-transactions.Further, the investigation would also require obtaining bank statements from multiple domestic as well as international banks and as the bank statements would also be for the transactions undertaken more than 10 years ago and this would take time and be challenging."This process of seeking bank statements from the offshore banks would entail taking assistance from offshore regulators, which may be time consuming and challenging," it was submitted.However, it will try to complete the same in six months, the SEBI said seeking an extension of time for 6 months."Applicant/SEBI also respectfully submits that for ascertaining possible violations related to mis-representation of financials, circumvention of Regulations and/or fraudulent nature of transactions in respect of 12 suspicious transactions mentioned herein above, given the complexity of the matter, SEBI in the normal course would take at least 15 months for completion of the investigation of these transactions, but is making all reasonable endeavours to conclude the same within six months," the application said..The transactions for which further time would be required would fall into following three broad categories: (i) Those where prima facie violations have been found and a period of 6 months would be required to arrive at conclusive finding(ii) Those where prima facie violations have not been found, a period of 6 months would be required to revalidate the analysis and arrive at conclusive finding(iii) In cases where, further examination/investigation is required and most of the data that is required for this purpose is expected to be reasonably accessible, a conclusive finding is expected to be arrived at in 6 months..The Supreme Court is seized of four petitions concerning the recent report published by short-seller Hindenburg Research alleging fraud on the part of the conglomerate by inflating share prices.The report had led to fall in the share value of various Adani companies and Adani Group reportedly suffered losses crossing $100 billion..The plea by advocate Manohar Lal Sharma before the top court has sought directions to the SEBI and the Union Home Ministry to conduct an inquiry and register a First Information Report (FIR) against founder of Hindenburg Research, Nathan Anderson, and his associates in India.The second petition on the issue was filed by advocate Vishal Tiwari seeking an inquiry into the Hindenburg report by a committee headed by a retired judge of the top court. .The petition by Congress leader Dr. Jaya Thakur apart from seeking prosecution of the Adani group of companies, has questioned the decision of the State Bank of India (SBI) and the Life Insurance Corporation (LIC) to invest in the company's shares at an allegedly inflated prices.