SEBI opens probe into US charge of Adani violating disclosure rules

India’s capital markets regulator Securities and Exchange Board of India (SEBI) is probing whether the Adani Group violated rules mandating the disclosure of market-moving information, sources privy to the matter were quoted as saying recently.

On Nov 20, US prosecutors charged Adani with helping drive a $250 million bribery scheme to win solar energy contracts in India. They alleged that the conglomerate concealed the plan as it sought to raise money from US investors. A spokesperson for the Adani Group denied the allegations.

Sources were quoted as saying that SEBI has launched a probe into the allegations and asked officials at the stock exchanges if Adani Green Energy Ltd. failed to properly disclose the US Justice Department’s investigation into bribery allegations.

The process of fact-finding is expected to continue for two weeks following which SEBI could decide if it wants to open a formal investigation, according to the sources.

Bloomberg News reported on March 15 that US prosecutors were ascertaining whether an Adani entity or people linked to the company, including its billionaire chairman, was involved in paying officials in India for favorable treatment on an energy project.

Adani Group had then responded by saying it wasn’t “aware of any investigation against our chairman” and that it was fully compliant with anti-bribery laws in India and elsewhere.

Also, in a March 19 filing to the stock exchanges, Adani Green said it is aware that an investigation is underway for potential violations of American anti-corruption laws by an unrelated third party.

In their indictment, US prosecutors contend the Adani denial to Bloomberg in March was a false statement meant to further the alleged fraud scheme, given that Adani’s nephew, Sagar Adani, received a grand jury subpoena and search warrant a year earlier. Sagar is the executive director of Adani Green, India’s largest renewables developer.

Stock exchanges in India are considered as frontline regulators, tasked with enforcing rules made by SEBI on disclosures among other things. Stocks of Adani’s flagship firm plunged as much as 23% on Nov 21 after the US indictment, before paring losses on Nov 22.

SEBI, which can act on a complaint from the exchanges has previously investigated the Adani Group for matters such as disclosure norms — including following allegations by short-seller Hindenburg Research last year — and is yet to disclose findings. SEBI can only file civil charges and disclosure violations typically attract a monetary penalty.