Govt agrees to forming committee on ensuring protection of investors

NEW DELHI: The central government has informed the Supreme Court that the Securities and Exchange Board of India (Sebi) is competent to handle the situation and it has agreed to constitute a committee to protect investor interests, following the Hindenburg’s report on Adani Group.

Solicitor General Tushar Mehta informed a bench of Chief Justice of India D Y Chandrachud on Monday that Sebi is completely equipped to deal with the situation that took place due to recent report by Hindenburg.

He also said that the government has no objection to appointing a committee to suggest how to ensure investors are protected in future. However, he said that remit of committee is important since it has an effect internationally. He also said that the government will provide names in a sealed cover.

The court adjourned the hearing on two petitions related to Hindenburg report to Friday. The court asked the Centre to apprise it about the remit of the committee by the next hearing.

Last week, the Supreme Court sought a response from Ministry of Finance and Sebi on how to ensure that Indian investors are protected in future against sudden volatility observing the recent crash due to the Hindenburg Research report. The court has also asked Sebi to apprise it on how to ensure that investors are protected in future and to show it what is the existing structure and how to strengthen the regulatory framework.

The bench has also suggested the need to form a committee of experts from various areas like the securities area, international financial law experts, and someone from the regulatory body led by the wise guidance of a former judge. The court has also suggested that the regulatory body could think of ways to modify statutory regulatory provisions in such a way that in the future the Indian investors could be protected. The court has clarified that this is an open dialogue to ensure Indian investors are protected and are not on a witch-hunt.

One of the petitions filed by advocate Vishal Tiwari sought to constitute a committee under the monitoring of the retired Supreme Court judge to inquire about and investigate the Hindenburg Research Report. Another petitioner, advocate M L Sharma, has sought a probe against the US-based firm, whose report has led to shares of Adani group plunging on the bourses.

Over the past week, share prices of companies in the Adani Group have dropped significantly. The report alleged stock manipulation and fraud by the conglomerate. The Adani Group had termed Hindenburg as “an unethical short seller” and stated that the report by the New York-based entity was “nothing but a lie”.

The continued sell-offs in the group’s stocks led its flagship firm, Adani Enterprises Ltd, to cancel a fully subscribed Rs 20,000 crore follow-on public offer. Adani Group on January 29, in a long 413-page report, said the recent report by Hindenburg Research was not an attack on any specific company but a “calculated attack” on India, its growth story, and ambitions. (ANI)