{"id":38894,"date":"2024-01-04T06:39:44","date_gmt":"2024-01-04T01:09:44","guid":{"rendered":"https:\/\/vajiramandravi.com\/current-affairs\/?p=38894"},"modified":"2025-04-23T22:04:48","modified_gmt":"2025-04-23T16:34:48","slug":"adani-hindenburg-row","status":"publish","type":"post","link":"https:\/\/vajiramandravi.com\/current-affairs\/adani-hindenburg-row\/","title":{"rendered":"Adani-Hindenburg row"},"content":{"rendered":"<h2>What\u2019s in today\u2019s article?<\/h2>\n<ul>\n<li>Why in news?<\/li>\n<li>What is Securities and Exchange Board of India (SEBI)?\u00a0<\/li>\n<li>What is Adani-Hindenburg controversy?<\/li>\n<li>Role of Supreme Court in Adani-Hindenburg controversy<\/li>\n<li>News Summary: Adani-Hindenburg row\u00a0<\/li>\n<li>Key highlights of the SC Judgement<\/li>\n<\/ul>\n<h2>Why in news?<\/h2>\n<ul>\n<li>The Supreme Court of India has reinforced the Securities and Exchange Board of India&#8217;s (Sebi) ongoing investigation into the Adani-Hindenburg controversy.<\/li>\n<\/ul>\n<h2>Securities and Exchange Board of India (SEBI)<\/h2>\n<ul>\n<li>About\n<ul>\n<li>The SEBI is a statutory regulatory body established by the Government of India in 1992. It was given statutory powers through the SEBI Act, 1992.<\/li>\n<li>SEBI was established to keep a check on unfair and malpractices and protect the investors from such malpractices.<\/li>\n<\/ul>\n<\/li>\n<li>Objective:\n<ul>\n<li>To regulate the securities market in India and protect the interests of investors in securities.<\/li>\n<\/ul>\n<\/li>\n<li>Powers of SEBI:<\/li>\n<li>Quasi-judicial powers \u2013\n<ul>\n<li>In case of frauds and unethical practices pertaining to the securities market, SEBI has the power to pass judgments.<\/li>\n<li>The said power facilitates to maintain transparency, accountability and fairness in the securities market.<\/li>\n<\/ul>\n<\/li>\n<li>Quasi-executive powers \u2013\n<ul>\n<li>SEBI has the power to examine the Book of Accounts and other vital documents to identify or gather evidence against violations.<\/li>\n<li>If it finds one violating the regulations, the regulatory body has the power to impose rules, pass judgements and take legal actions against violators.<\/li>\n<\/ul>\n<\/li>\n<li>Quasi-legislative powers \u2013\n<ul>\n<li>To protect the interest of investors, the authoritative body has been entrusted with the power to formulate suitable rules and regulations.<\/li>\n<li>Such rules tend to encompass the listing obligations, insider trading regulations and essential disclosure requirements.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h2>Adani-Hindenburg controversy<\/h2>\n<ul>\n<li>About\n<ul>\n<li>The controversy involves allegations of accounting fraud and stock price manipulation made by Hindenburg Research against the Adani Group.\n<ul>\n<li>Hindenburg Research is a US-based research team that offers services in forensic financial research, with a focus on equity, credit and derivatives analysis.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/li>\n<li>Allegations against the Adani Group by Hindenburg Research\n<ul>\n<li>The controversy began in January 2023, when Hindenburg Research published a report alleging corporate misgovernance and other charges.<\/li>\n<li>The report accused the Adani Group of:\n<ul>\n<li>Engaging in large-scale stock price manipulation<\/li>\n<li>Falsely overinflating the value of their assets<\/li>\n<li>Controlling over 75% of their shares through different offshore shell entities controlled by the Group<\/li>\n<\/ul>\n<\/li>\n<li>The report accused the Adani group of companies of committing the largest con in corporate history.<\/li>\n<\/ul>\n<\/li>\n<li>Controversy\n<ul>\n<li>Soon after the Hindenburg Report was published, <u>Adani Group stocks plummeted by USD 140 billion<\/u>.<\/li>\n<li>Hindenburg Research, however, profited from this crash in prices since it took a \u2018short position\u2019 against the Adani Group\u2019s U.S. holdings.\n<ul>\n<li>Short-selling refers to selling a stock that the seller does not own at the time of the trade, with the intention of buying it back at a lower price later in the future.<\/li>\n<li>Short sellers borrow shares and sell them at market value, and buy them back when the share price falls.<\/li>\n<li>The difference in value is the profit. <u>To put it simply, a short-seller bets on the price of the stock going down in order to make a profit<\/u>.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/li>\n<li>Why does these allegations matter?\n<ul>\n<li>The allegations imply that the Indian regulatory framework failed to stop large-scale stock manipulation and accounting fraud over the course of decades.<\/li>\n<li>If the allegations are true, it would mean that the Adani Group, and Mr. Gautam Adani, raked in over $100 billion in net worth through illegal means.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h2>Role of Supreme Court in Adani-Hindenburg controversy<\/h2>\n<ul>\n<li>Wide range of petitions filed\n<ul>\n<li>A wide range of petitions were filed before the SC over the Adani-Hindenburg controversy.<\/li>\n<li>One batch of petitions alleged a conspiracy by Hindenburg Research to fraudulently make profits by crashing Adani stock prices.<\/li>\n<li>A second batch of petitions sought an investigation by an expert committee to investigate the possibility of fraud by the Adani Group.\n<ul>\n<li>These petitions alleged that changes to <u>the SEBI Act had provided a shield and an excuse for the Adani Group\u2019s regulatory contraventions and market manipulations to remain undetected<\/u>.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/li>\n<li>Expert committee formed by SC\n<ul>\n<li>In March 2023, the SC formed a 6-member committee led by Justice A.M. Sapre to investigate the allegations against the Adani group and claims of regulatory failure.\n<ul>\n<li>An investigation into the claims of regulatory failure implies that the SEBI may be under scrutiny by the SC.<\/li>\n<\/ul>\n<\/li>\n<li>At the same time, the Bench also ruled that <u>SEBI may continue to conduct a separate investigation<\/u>.<\/li>\n<\/ul>\n<\/li>\n<li>Report of the expert committee\n<ul>\n<li>In its report submitted in a sealed cover, the expert committee concluded that there had been \u201cno regulatory failure\u201d on the part of SEBI in the matter.<\/li>\n<li>However, SEBI sought an extension of its probe citing the complexity of the transactions involved.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h2>News Summary: Adani-Hindenburg row<\/h2>\n<ul>\n<li>The Supreme Court granted three months to SEBI to investigate two out of four cases on a batch of petitions on the Adani-Hindenburg row.<\/li>\n<\/ul>\n<h2>Key highlights of the SC Judgement<\/h2>\n<ul>\n<li>No need to transfer the case\n<ul>\n<li>The facts of this case do not warrant a transfer of investigation from Sebi.<\/li>\n<li>In an appropriate case, this court does have the power to transfer an investigation being carried out by the authorized agency to an SIT or CBI.<\/li>\n<li>The Sebi&#8217;s status report and the details of the 24 investigations do not indicate inaction by the market regulator.<\/li>\n<\/ul>\n<\/li>\n<li>SEBI to complete the remaining investigation in three months\n<ul>\n<li>SEBI had completed the investigation in 20 out of the 22 matters in connection with the allegations leveled against the Adani group.<\/li>\n<li>It ordered the probe into the two pending cases to be completed expeditiously, preferably within three months.<\/li>\n<\/ul>\n<\/li>\n<li>SEBI and other agencies to probe Hindenburg Research\n<ul>\n<li>The court instructed SEBI and the government&#8217;s investigative agencies to investigate whether the losses faced by Indian investors, caused by Hindenburg Research and other entities taking short positions, involved any legal violations.<\/li>\n<li>If violations were found, the court directed them to take appropriate action.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<hr \/>\n<h3>Q1)\u00a0What is short selling?<\/h3>\n<p>Short selling is a trading strategy that involves selling borrowed securities, like stocks, with the hope of buying them back at a lower price. The goal is to profit from a price decline rather than an increase.<\/p>\n<h3>Q2) What are quasi-judicial powers?<\/h3>\n<p>Quasi-judicial powers are the authority given to administrative officers, bodies, or commissions to determine the rights of those who appear before them.\u00a0<\/p>\n<hr \/>\n<p><strong>Source: <\/strong><a href=\"https:\/\/www.newindianexpress.com\/nation\/2024\/jan\/03\/adani-hindenburg-row-supreme-court-refuses-sit-probe-says-no-ground-to-transfer-case-from-sebi-2647442.html\" target=\"_blank\" rel=\"nofollow noopener\"><u>Adani-Hindenburg row: Supreme Court refuses SIT probe, says no ground to transfer case from SEBI<\/u><\/a><u> | <\/u><a href=\"https:\/\/www.scobserver.in\/journal\/sco-shorts-adani-hindenburg-controversy\/\" target=\"_blank\" rel=\"nofollow noopener\"><u>Supreme Court Observer<\/u><\/a><u> | <\/u><a href=\"https:\/\/timesofindia.indiatimes.com\/business\/india-business\/adani-hindenburg-row-supreme-court-upholds-sebis-probe-dismisses-need-for-further-investigation\/articleshow\/106522298.cms\" target=\"_blank\" rel=\"nofollow noopener\"><u>Times of India<\/u><\/a><u>| <\/u><a href=\"https:\/\/www.thehindu.com\/news\/national\/adani-hindenburg-case-verdict-key-takeaways\/article67701594.ece\" target=\"_blank\" rel=\"nofollow noopener\"><u>The Hindu<\/u><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>SEBI keeps a check on unfair and malpractices and protects the investors from such malpractices.<\/p>\n","protected":false},"author":5,"featured_media":38895,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[18],"tags":[],"class_list":{"0":"post-38894","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-upsc-mains-current-affairs","8":"no-featured-image-padding"},"acf":[],"_links":{"self":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/38894","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/comments?post=38894"}],"version-history":[{"count":0,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/38894\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media\/38895"}],"wp:attachment":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media?parent=38894"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/categories?post=38894"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/tags?post=38894"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}