What is Sebi's statement on Adani's saga trying to hide?

The Securities and Exchange Board of India or Sebi, the markets regulator issued a statement on the Adani saga on Saturday. "During the past week, unusual price movement was observed in stocks of a business conglomerate", Sebi said, adding it is committed to ensuring that the stock market functions in an uninterrupted, transparent, efficient manner as has been the case so far.

The markets regulator however remained silent on two critical questions - what steps it had taken in the wake of the US-based short-seller Hindenburg Research which alleged "stock manipulation and accounting malpractices" by the Adani Group, and the role of a key official on a Sebi ethics committee and the Adani family.

Amid the raging controversy over a meltdown in Adani group stocks, Sebi had on Saturday only said it was committed to ensuring the stock market's integrity and all necessary surveillance measures are in place to address any excessive volatility in individual shares.

Critics however pointed out that no action taken was actually visible. Many including opposition MPs and lawyer Harish Salve have said that the regulator should be asking questions from Adani through a probe.

In its statement, without naming the Adani group specifically, the capital markets watchdog said that unusual price movement in the stocks of a business conglomerate has been observed in the past week.

Officials confirmed that the statement has been issued in the wake of the Adani matter only.

Adani group stocks have taken a beating on the bourses after US-based activist short-seller Hindenburg Research made a litany of allegations, including fraudulent transactions and share price manipulation at the Gautam Adani-led group.

Sebi’s statement on Saturday comes amid concerns that have been raised about the relationship between a key official of the markets regulator and the family of Adani Gautam Adani. Questions have been raised on the role of Cyril Shroff, who is on the regulator's Committee for Corporate Governance and Insider Trading and is the father-in-law of Karan Adani. This particular concern has not been officially addressed by Sebi.

Among those who have taken Sebi to task, was Trinamool Congress (TMC) MP Mahua Moitra.  In an earlier tweet on Friday Moitra said that Cyril Shroff, a noted lawyer who sits on the Sebi Committee on Corporate Governance and Insider Trading, is related to the businessman Gautam Adani. Moitra suggested that Shroff step down in the event that SEBI opens an investigation. However, Sebi has not reacted to this and received much flak.

The Adani group has dismissed the charges by Hindenburg Research as lies, saying it complies with all laws and disclosure requirements.

The 10 listed Adani group firms have faced a combined erosion of over Rs 8.5 lakh crore in just six trading sessions. Adani Enterprises also had to withdraw a Rs 20,000 crore share sale.

Several Opposition leaders and some experts have been raising questions about Sebi not acting in the Adani matter, while Parliament proceedings have also got disrupted on this issue for two days.

Reacting to the Sebi statement, Trinamool Congress MP Mahua Moitra said in a tweet, "This statement stands out in that it manages to state absolutely nothing of consequence! It seems only @SEBI_India knows what action has been taken since June 2021!" She used the hashtag of "SleepingSEBI" with her tweet.

Another opposition leader, Rajya Sabha member Priyanka Chaturvedi of the Shiv Sena, said, "India needs a proactive SEBI, not a reactive one - it will be good for markets, investors, traders, listed companies, FIIs, DIIs. However the spirit of the response is as usual to react only when own credibility is at stake, by saying 'will take note if any information comes to our notice'."

Some political leaders are believed to have written to Sebi and the government, demanding an investigation, while Opposition parties are seeking a joint parliamentary committee probe.

"As part of its mandate, Sebi seeks to maintain orderly and efficient functioning of the market and has put in place a set of well-defined, publicly available surveillance measures (including the ASM framework) to address excessive volatility in specific stocks."

"This mechanism gets automatically triggered under certain conditions of price volatility in any stock," it said.

Stock exchanges BSE and NSE have put three Adani group companies -- Adani Enterprises, Adani Ports and Special Economic Zone and Ambuja Cements -- under their short-term additional surveillance measure (ASM), which basically means that intra-day trading would require a 100 per cent upfront margin and is aimed at curbing speculation and short-selling in these stocks.

Sebi further said that in all specific entity-related matters, if any information comes to its notice, then, as per extant policies, the same is examined and after due examination, appropriate action is taken.

"Sebi has consistently followed this approach on entity-level issues and would continue to do so in the future as well," it added.

The regulator, however, stopped short of clearly mentioning whether it is conducting any probe into the matter or not.

Sebi further said the Indian financial market, as represented by Sensex and Nifty, has demonstrated ongoing stability and is continuing to function in a transparent, fair, and efficient manner.

"On a longer-term basis also, Indian markets have been viewed positively by investors. A cross-country comparison of dollar-adjusted market returns with both peer and developed countries, during the past three years till date, places the Indian market as a positive outlier," it noted.

The regulator said it is committed to ensuring market integrity and that the markets continue to have the appropriate structural strength to function in an uninterrupted, transparent, and efficient manner as has been the case so far.