SEBI Responds to Hindenburg Research Report

The Securities and Exchange Board of India (SEBI) has addressed the recent report published by Hindenburg Research on August 10, 2024. In its statement, SEBI urges investors to stay calm and exercise due diligence before reacting to such reports, noting that Hindenburg Research’s report includes a disclaimer about possible short positions in the discussed securities.

The report alleges that SEBI has not acted against the Adani Group and questions SEBI’s issuance of a show cause notice to Hindenburg Research on June 27, 2024. It also claims that changes to the SEBI (REIT) Regulations 2014 were made to benefit a large multinational financial conglomerate. SEBI refutes these claims and asserts that they require an appropriate response.

SEBI clarifies that it has thoroughly investigated the allegations against the Adani Group. The Supreme Court noted in January 2024 that SEBI had completed 22 out of 24 investigations. One more investigation was completed in March 2024, with one nearing completion. During these investigations, SEBI reviewed over 12,000 pages of documents and issued numerous summons and communications to seek information from both domestic and international agencies.

Following investigations, SEBI initiates quasi-judicial enforcement proceedings, including issuing show cause notices and providing opportunities for hearings, with resulting orders made public. SEBI maintains a policy of not commenting on ongoing investigations or enforcement matters.

The report’s criticism of SEBI’s show cause notice to Hindenburg Research is addressed by SEBI, which confirms that the notice was issued following legal procedures. Hindenburg Research has made the notice available on its website, including its reasons. Proceedings are being handled according to established procedures and principles of natural justice.

Regarding the SEBI (REIT) Regulations 2014, SEBI states that any amendments are made through a thorough consultation process involving industry stakeholders and the public. Proposals for changes are reviewed and approved by the SEBI Board before notification. SEBI counters claims that the regulations were designed to benefit a specific conglomerate, emphasizing transparency in the process.

SEBI also highlights its mechanisms for managing conflicts of interest, including disclosure requirements and recusal provisions. The Chairperson has complied with disclosure requirements and recused herself from potential conflicts. SEBI’s regulatory framework is aligned with global best practices to ensure investor protection.

SEBI reaffirms its commitment to maintaining the integrity of India’s capital markets and supporting their orderly growth and development.

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