Don’t discredit SEBI

RIGHTLY reposing confidence in the country’s stock market regulator SEBI vis-à-vis US-based short-selling firm Hindenburg Research, which had published a report against the Adani Group in January, a Supreme Court Bench led by CJI DY Chandrachud on Friday remarked that in the absence of any proper material, there was no reason to ‘discredit’ SEBI. The latter had been directed by the court in March to probe the veracity of the report. The Bench’s observation was made in the context of a batch of petitions seeking a probe into the report that accused the Adani Group of artificially inflating its stock prices by indulging in fraudulent activities. The court told the petitioners that since it could not ‘make the assumption that the report was either credible or lacking in credibility’, it could not ‘accept the Hindenburg report as ipso facto factually correct’.

The SC’s stand is in accordance with the principles of justice and fairness, even as SEBI is on course to conclude its investigation. For, while the court has no means to ascertain the authenticity of the Hindenburg report, it can pull up SEBI in case the regulator is found wanting in exercising its powers and jurisdiction. Thus, the SC’s refusal to consider the Hindenburg report as evidence holds good. The petitioners’ demand for an investigation into the investments made by SBI and the LIC in Adani stocks has also been rejected validly.

Nevertheless, the court did not shy away from grilling SEBI when it came to protecting the interests of investors. The Bench questioned the statutory body over the regulatory measures it was adopting to counter the market volatility resulting from the short-selling that allows a few sellers to make quick gains.