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SC issues order for Sebi probe amidst stock manipulation allegations highlighted in Adani-Hindenburg controversy

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A Supreme Court bench comprising CJI DY Chandrachud, Justice P S Narasimha and J B Pardiwala, asked the Securities and Exchange Board of India (Sebi) to complete the probe started by it in the wake of the Hindenburg report on Adani Group within the next two months going forward.

Furthermore, issuing an order for the establishment of an expert committee headed by former SC Judge Justice A M Sapre to review the regulatory body amidst the controversy. The committee will also include former SBI chairman O P Bhat, former Bombay High Court judge Justice J P Devadhar, former chairman of Infosys K V Kamath, former chairman of UIDAI and Infosys co-founder Nandan Nilakeni, and Advocate Somasekhar Sundaresan

The judge panel asked the market regulator to probe for a possible violation of Rule 19(a) of the Securities Contract Regulation Rules, and identify for possible inability to maintain transparency; failing to disclose transactions with related parties and other relevant information concerning related parties, and the duly submission of such information to Sebi in compliance with the law. Furthermore, to identify any unlawful manipulation of stock prices.

The SC opined, the reason for this external independent investigation by the executive committee is by no means a question mark on the capability of the regulatory agencies.

Stating that the purpose behind the setup is to conduct an overall assessment of the situation, the influencing factors that may cause volatility in the securities market recently, suggesting measures and the future course of action to strengthen investor awareness.

Additionally, investigate regulatory failures in dealing with the alleged violations of laws pertaining to the securities market in relation to the Adani Group and other other organizations and finally, suggest future measures to strengthen the statutory and regulatory framework to secure compliance within the existing framework for the protection and safeguard of investors’ interest.

Shortly after the decision was made public Adani Group chairman Gautam Adani tweeted: “The Adani Group welcomes the order of the Hon’ble Supreme Court. It will bring finality in a time bound manner. Truth will prevail.”

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