SEBI chief sidesteps questions around ‘fake FPIs’, Adani controversy

Informist, Wednesday, Mar 29, 2023

By Sreejiraj Eluvangal

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MUMBAI – If journalists at today’s press conference by the Securities and Exchange Board of India were looking for an update into the markets regulator’s investigation into the alleged use of shell companies by Adani group to pump its stocks, they were left sorely disappointed by Chairperson Madhabi Puri Buch.

Despite repeated, persistent and highly creative attempts at eliciting a response on the topic, Buch held her ground, maintaining that the matter was sub-judice, and she could not speak about it.

“As a regulator, we expect companies to abide not just by the letter of the law, but also by the spirit,” Buch said, claiming to address the ‘elephant in the room’, or the question of what SEBI was doing to address allegations of Adani group running a network of overseas shell companies to manipulate share prices. “So, if, as a regulator, I expect others to follow the spirit of the law, I also have to do the same, right?” she asked.

Buch claimed that SEBI follows a policy of not speaking about a single company or case on a public platform, and therefore, it was not possible for her to comment on the Adani investigation.

Journalists, eager for an update, even suggested that she does not have to speak about the case in specific, but can comment on the general question of whether SEBI was concerned about the use of overseas shell companies by promoters in India to manipulate the stock prices of their companies.

“But if I do that, am I not doing the same thing that I accuse others of doing — of following the letter, but not the spirit, of the law,” Buch responded.

The allegations stemmed from a report by US-based short-seller Hinderburg Research in which the firm cited the results of its own investigations in multiple tax havens to establish that entities related to the Adani group were running a global network of shell companies. These entities, it alleged, were used to both pump the group’s share prices, as well as to pad the profits of various group companies in what the firm called “the largest con in corporate history”.

At least 30% of the questions in the three-hour-long press conference were focused on trying to elicit even the basic level of information on the ongoing investigation.

It was on Mar 2 that the Supreme Court of India directed the markets regulator to look into allegations of widespread stock rigging in Adani group scrips. Fending off one question after another, Buch maintained that it would be improper to say something on a public forum when it was the apex court which had sought a report.

It would be very inappropriate to reveal the results of (a court-ordered) investigation on a public forum, she said.

Buch’s stand led to arguments with the media contingent, who protested that they were not seeking information about the case, but an overall comment on the issue of promoters using overseas shell companies to manipulate stocks.

However, towards the end of the conference, Buch conceded some ground, promising to talk about the matter when the case was no longer sub-judice. “We will speak (when we get) data…This (matter) will not always be sub-judice,” she promised.

End

Edited by Maheswaran Parameswaran

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