The Centre has agreed to the Supreme Court's proposal to set up a panel of experts to look into strengthening regulatory mechanisms for the stock market, following the recent Adani Group share crash triggered by fraud allegations by Hindenburg Research. The Centre said it has no objection to the constitution of the panel, but stressed that the market regulator Securities and Exchange Board of India (SEBI) and other statutory bodies are fully equipped to deal with the situation.
The Centre also wanted to provide details such as names and the scope of the panel’s mandate in a “sealed cover”.
The Securities and Exchange Board of India (SEBI) also informed the Supreme Court that it was already conducting an investigation into the Hindenburg report and related market activities. SEBI submitted a 25-page note to a bench led by Chief Justice of India Dhananjaya Y Chandrachud, stating that it did not object to the formation of a committee, as proposed by the court on February 10. However, SEBI emphasized that the terms of reference for the panel must be clearly defined.
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The court had on Friday proposed a committee comprising experts from the securities areas, the international banking sector, and a wise guiding figure in the form of a former judge to strengthen the existing regulatory regime.
Solicitor General Tushar Mehta told the apex court that the committee's remit will be relevant because any unintentional message to international or domestic investors that the regulatory authorities need monitoring may have an adverse impact on the flow of money.
“I have instructions that the SEBI and other agencies are fully equipped, not only regime wise, but otherwise also to take care of the situation. However, responding to the suggestion which fell from the court, the government has no objection to constituting a committee,” he said.
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“But the remit of the committee would be very relevant because any unintentional message to international investors or domestic investors that the regulatory authorities need a monitoring by the committee may have some adverse impact on the flow of money,” he added.
He further said that the Centre may be allowed to suggest names of people of some calibre and the scope of the proposed committee in a sealed cover as it may not be appropriate to discuss these in open court hearings.
The apex court was hearing two PILs alleging exploitation of innocent investors and “artificial crashing” of the Adani Group’s stock value. The court listed the two PILs for further hearing on February 17 and asked the law officer to give the note by Wednesday.
One PIL sought a direction to constitute a committee monitored by a retired apex court judge to inquire into the Hindenburg Research report that made allegations against the Adani Group. Another PIL sought prosecution of short-seller Nathan Anderson of US-based Hindenburg Research and his associates for exploiting innocent investors and artificial crashing of the Adani Group's stock value. The Adani Group dismissed the charges as lies, saying it complies with all laws and disclosure requirements.
