'No violations': Sebi gives clean chit to Adani in Hindenburg case

The Securities and Exchange Board of India (SEBI) on Thursday cleared the Adani Group of allegations made by US-based short-seller Hindenburg Research, saying it found no breach of regulatory norms by the group’s companies.

"I find that the allegations made against noticees in the SCN are not established. Considering the above, the question of devolvement of any liability on Noticees does not arise and hence the question of determination of quantum of penalty also does not require any deliberation," Sebi's whole-time Member Kamlesh Chandra Varshneya wrote in the order.

The regulator has also disposed of the instant proceedings against group companies Adani Ports, Adani Power, and it chairman Gautam Adani.

The case

In 2023, Hindenburg published a report accusing the Adani Group of stock manipulation, improper use of offshore tax havens, and inflated valuations.

One of the allegations was that the group was funded through entities Milestone Tradelinks, Rehvar Infrastructure, and Adicorp Enterprises. The report questioned the source of funds routed through these companies, suggesting they were used as conduits to conceal related-party transactions.

In their defence, the Adani group argued that the transactions were genuine commercial dealings, fully repaid with interest, and undertaken in compliance with the law applicable at the time. They also said Milestone and Rehvar were not “related parties”.

Sebi, after considering submissions, ruled that all loans and repayments mentioned were completed in full and with interest, and that the transactions did not constitute violations of Listing Obligations and Disclosure Requirements (LODR) regulations and Prohibition of Fraudulent and Unfair Trade Practices (PFUTP) regulations.

The regulator also noted that amendments to broaden the definition of related-party transactions came into effect only from April 2023 and could not be applied retrospectively.

"Since the transactions do not fall in the definition of ‘related party transactions’ the allegation against Noticee nos. 7 and 8 to have aided and abetted or facilitated the Adani group companies in alleged circumvention of the applicable law is baseless," the order noted.

'Baseless claims': Gautam Adani

Reacting to Sebi's ruling, group chief Gautam Adani said that Sebi has reaffirmed what we have always maintained, that the Hindenburg claims were baseless.

"We deeply feel the pain of the investors who lost money because of this fraudulent and motivated report. Those who spread false narratives owe the nation an apology," he added.