‘Six entities under lens for suspicious trading’

A detailed investigation is being carried out. File pic

Six entities including four foreign portfolio investors (FPIs) are under lens for suspicious trading in Adani group shares prior to the release of the damning Hindenburg report, the Supreme Court-appointed expert committee has said. There was a build up of short positions in the Adani scips prior to the January 24 release of the Hindenburg report, and substantial profits were booked thereafter as stocks crashed, the 178-page report said. A "short" position is generally the sale of a stock one does not own.

Investors who sell short believe the price of the stock will decrease in value. If the price drops, they can buy the stock at the lower price and make a profit. Hindenburg's report claimed that the Adani empire was the "biggest con in corporate history" engaged in a "brazen stock manipulation and accounting fraud scheme".

Shares of Adani Group, which denied all allegations, likening the US investment firm's report to an attack on India, fell after the Hindenburg report was published on January 24. As the report stirred a political row and petitions were filed for a probe into the empire helmed by billionaire Gautam Adani, the Supreme Court on March 2, constituted the expert committee to investigate if there was any failure to disclose transactions with related parties and if stock prices were manipulated. The expert committee headed by former SC judge AM Sapre found no regulatory failure during the sharp rise in prices of Adani group companies between March 2000 and December 2022 and their dramatic meltdown after January 24.

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"While there was no adverse observation with respect to Adani scips in the cash segment, suspicious trading has been observed on the part of six entities. These are four FPIs, one body corporate and one individual," the report said. The report did not name any of the six. "The trading pattern here is suspicious because of the build up of short positions by these entities in the Adani scrips prior to the Hindenburg report, and substantial profits earned by them by squaring off their short positions after publication of the Hindenburg report on January 24, 2023," the expert committee said.

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