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TMI Blog2023 (3) TMI 276X X X X Extracts X X X X X X X X Extracts X X X X ..... ide for the maintenance of minimum public shareholding in a public limited company. Similarly, there may be various other allegations that SEBI must include in its investigation. As a part of its ongoing investigation, SEBI shall also investigate the following aspects of the issues raised in the present batch of petitions: a. Whether there has been a violation of Rule 19A of the Securities Contracts (Regulation) Rules 1957; b. Whether there has been a failure to disclose transactions with related parties and other relevant information which concerns related parties to SEBI, in accordance with law; and c. Whether there was any manipulation of stock prices in contravention of existing laws. The above directions shall not be construed to limit the contours of the ongoing investigation. SEBI shall expeditiously conclude the investigation within two months and file a status report. SEBI shall apprise the expert committee (constituted in paragraph 14 of this order) of the action that it has taken in furtherance of the directions of this Court as well as the steps that it has taken in furtherance of its ongoing investigation. The constitution of the expert committee does ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h Babu MR, AOR Ms. Manisha Singh, Adv. Ms. Nisha Sharma, Adv. Ms. Tanya Chowdhary, Adv. Mr. Rohan Srivastava, Adv. Applicant-in-person ORDER 1. Notice. 2. The present batch of petitions concerns the loss of investor wealth in the securities market over the last few weeks because of a steep decline in the share price of the Adani Group of companies. The decline in the share price was precipitated by a report published by Hindenburg Research on 24 January 2023. This report inter alia alleges that the Adani Group of companies has manipulated its share prices; failed to disclose transactions with related parties and other relevant information concerning related parties in contravention of the regulations framed by SEBI; and violated other provisions of securities laws. The report also states that Hindenburg Research has taken a short position in the Adani Group companies through US traded bonds and non-Indian traded derivative instruments. It is in this background that the present batch of petitions came to be filed. 3. A brief overview of the petitions follows: a. WP(C) No. 162 of 2023 states that public money amounting to thousands of crores is at risk because pub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ory mechanisms and frameworks in place for the protection of investors. It has also laid out the regulatory framework governing short selling. Mr Vishal Tiwari and Mr Manohar Lal Sharma have appeared in person. 6. SEBI has submitted in its note that: a. It has adopted a disclosure based regulatory regime for both issuance of and trading in securities. This is in line with the discontinuation of pricing control for capital issues in favour of the principle of free discovery by the markets based on demand and supply from informed investors; and b. It is strongly and adequately empowered to put in place regulatory frameworks for effecting stable operations and development of the securities markets including protection of investors. It has also detailed the extant framework governing investor protection in the context of the subject matter at hand. It has stated that the key pillars of investor protection are: 11.1 Mandatory disclosures by listed companies to facilitate free and fair price discovery and to ensure that all investors have equal access to material information for them to be able to take informed investment decisions; 11.2 Market systems to ensure sea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I, in accordance with law; and c. Whether there was any manipulation of stock prices in contravention of existing laws. 11. The above directions shall not be construed to limit the contours of the ongoing investigation. SEBI shall expeditiously conclude the investigation within two months and file a status report. 12. Further, SEBI shall apprise the expert committee (constituted in paragraph 14 of this order) of the action that it has taken in furtherance of the directions of this Court as well as the steps that it has taken in furtherance of its ongoing investigation. The constitution of the expert committee does not divest SEBI of its powers or responsibilities in continuing with its investigation into the recent volatility in the securities market. 13. In Prakash Gupta (supra), we took note of the developing nature of the regulations pertaining to the securities market. This Court noted that: 101. Therefore, the SEBI Act and the rules, regulations and circulars made or issued under the legislation, are constantly evolving with a concerted aim to enforce order in the securities market and promote its healthy growth while protecting investor wealth. 14. In o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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