New Delhi: In the recent months, US regulators have sent inquiries to institutional investors with large holdings in the Adani Group, after US short seller Hindenburg Research released its report on January 24, accusing the conglomerate of manipulating its stock prices via offshore entities, and accounting fraud, Bloomberg reported.The requests for information by the US Attorney’s Office in Brooklyn, New York were focused on what Adani Group told those investors, Bloomberg reported, citing a person familiar with the inquiries, who asked not to be identified because the probe isn’t public.The Securities and Exchange Commission also has a similar probe underway, two other people told the news outlet.The news comes amid a Prime Minister Narendra Modi’s meeting with US President Joe Biden. Both Modi and Gautam Adani, the founder and chairperson of the group, belong to Gujarat, and several reports have spoken about the convenient relationship Adani has with government enterprises.Opposition leader Rahul Gandhi had questioned in the Lok Sabha the Bharatiya Janata Party-led government’s alleged role in the meteoric rise of Gautam Adani.Gandhi had alleged that Adani and Modi shared close links, saying it was a striking instance of crony capitalism.The Congress leader has been disqualified from the Lok Sabha after a Gujarat court convicted him in a case of defamation for his alleged remarks on the ‘Modi’ surname.An Adani Group spokesperson told Bloomberg it was not aware of any subpoenas to investors.“Our various issuers groups remain confident that the disclosures are full and complete as disclosed in the relevant issuer offering circulars,” it said.Also read: Goldman Sachs’ ESG Funds Cut Exposure to Adani Firms Amid Hindenburg’s Fraud AllegationsBloomberg noted that requests for information from US prosecutors do not necessarily mean that criminal or civil proceedings will be filed as law enforcement agencies often open inquiries that do not lead to action.The group has denied Hindenburg’s allegations. The Supreme Court-appointed committee noted that because of repealed provisions in 2018, the Securities and Exchange Board of India hit a wall while investigating the Adani case.The report noted three issues that are being investigated by SEBI, as ordered by the Supreme Court: 1) whether there has there been a violation of Rule 19(A) of the Securities Contracts (Regulation) Rules 1957; 2) whether there has been a failure to disclose information on related party transactions; and 3) whether there was any manipulation of stock prices.According to Rule 19A, every listed company shall maintain public shareholding of at least such percentage of shares as may be prescribed.SEBI hit a wall in investigating these matters, especially whether the group is flouting free float norms, because not much information is available to the regulator.
