Pavan Korada 
The Securities and Exchange Board of India (SEBI) was directed by the Supreme Court on January 3, 2024, to probe and take “suitable action” if the losses suffered by Indian investors – due to the short position taken by the US-based firm, Hindenburg Research on the Adani Group through U.S.-traded bonds and non-Indian traded derivative instruments – involved any infraction of law.
Whether it did anything is now brought to question with the indictment by the United States District Court, Eastern District of New York, claiming that the Adani Group publicly denied knowledge of investigations while being aware of an ongoing FBI probe into alleged bribery and financial misconduct. The group issued these denials to stock exchanges and financial institutions in March 2024, after Bloomberg published a news report on the US investigation into the group’s activities.
The indictment also reveals how the group’s annual reports from 2020 to 2024 included claims of a “zero-tolerance” anti-bribery policy, directly contradicting the allegation of systemic bribery and corruption involving Indian government officials in the indictment.
What the indictment says
Point 120 in the indictment notes:
“On or about March 19, 2024, Individual #2 emailed employees of Financial Institution #2, Financial Institution #3, and Financial Institution #4 letters that the Indian Energy Company had sent to the National Stock Exchange of India and BSE Limited, both Indian stock exchanges. The letters falsely stated, among other things, that the Indian Energy Company “has not received any notice from the Department of Justice of U.S. in respect of the allegation referred to in the [2024 News Article]” and that the Indian Energy Company was “aware of an investigation” into potential violations of United States anti-corruption laws by a “third party.” Also included in the email were written responses to questions posed by the financial institutions about the subject matter of the 2024 News Article. The written responses falsely claimed that the Conglomerate and the Indian Energy Company had not received notice of the United States government’s investigation and included other false and misleading statements about the Bribery Scheme and the Indian Energy Company’s and the Conglomerate’s knowledge and awareness of the United States government’s investigation.”
Although the indictment did not reveal the names of these individuals and financial institutions, it detailed their roles.
Individual #2 is the Head of Corporate Finance for the Conglomerate (Adani Group).
Financial Institution #1 was one of the 2021 Syndicate Loan lenders who sold part of their commitment to the Asset Managers.
Financial Institution #2 served as the agent bank for the 2021 and 2023 Syndicate Loans, managing the flow of funds.
Financial Institution #3 acted as a lender for the 2021 Syndicate Loan and a joint bookrunner for the 2024 144A Bond.
Also read: Govt Agencies Silent Post Gautam Adani’s Indictment in US over Bribery Charges
These statements are damning, as the Adani Group had been aware of the FBI’s investigation since March 2023, when Sagar Adani received a grand jury subpoena and search warrant.
Instead of disclosing this fact, the Group deliberately misled the public and investors by maintaining a façade of compliance and transparency while denying any knowledge of the investigation into potential Foreign Corrupt Practices Act (FCPA) violations.
SEBI’s role – or lack thereof
All this raises critical questions about the effectiveness of regulatory oversight in India. SEBI, tasked with ensuring accurate disclosures by listed companies, has purportedly failed to properly scrutinise the Adani Group’s filings and annual reports. While the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, mandate that listed companies must disclose all material information promptly and truthfully, SEBI has so far passive. Even after the Hindenburg accusations in January 2023 and mounting evidence of malpractice, the regulator has failed to scrutinise Adani’s statements in March 2024.
SEBI chairperson Madhabi Puri Buch not only remained silent but wilfully denied any wrongdoing after Hindenburg Research accused her in August 2024 of potential conflicts of interest through undisclosed ties to offshore funds linked to Adani’s network.
SEBI went further and refused to divulge details of cases from which Buch had “recused herself to avoid conflict of interest.” In response to an RTI filed by Commodore Lokesh Batra in September 2024, SEBI claimed that information on Buch’s recusals was “not readily available” and collecting it would “disproportionately divert resources,” invoking Section 7(9) of the RTI Act. While this section permits authorities to offer information in an alternative format if gathering it in the requested format would consume excessive resources, it does not authorise outright refusal.
The latest indictment further erodes public trust in SEBI’s ability to act as a fair market regulator. In its January judgement, the Supreme Court acknowledged its power to transfer an investigation from the “authorised agency” if strong evidence showed the investigation was prima facie tainted. The three-judge bench, headed by then Chief Justice of India D.Y. Chandrachud, addressed a plea to remove SEBI from investigating Hindenburg’s allegations. The bench stated that SEBI’s conduct of the investigation “inspired confidence,” though it noted that any cogent evidence of bias or inadequacy would justify transferring the probe to an independent agency or a court-appointed Special Investigation Team (SIT).
Now we must wait to see how the Supreme Court responds whether this latest indictment and global attention on the case “erodes confidence” and constitutes “cogent evidence of bias or inadequacy” on the part of SEBI and its chairperson.