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๐’๐„๐๐ˆ ๐š๐œ๐ญ๐ข๐จ๐ง ๐š๐ ๐š๐ข๐ง๐ฌ๐ญ ๐‡๐ข๐ง๐๐ž๐ง๐›๐ฎ๐ซ๐  ๐ฆ๐š๐ฒ ๐ซ๐ฎ๐ง ๐ข๐ง๐ญ๐จ ๐ฃ๐ฎ๐ซ๐ข๐ฌ๐๐ข๐œ๐ญ๐ข๐จ๐ง๐š๐ฅ ๐ฐ๐š๐ฅ๐ฅ

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The Hindu businessline has published an article highlighting the issues that SEBI might face while going for a legal battle against the US based research firm regarding the jurisdictional limitations. Earlier, SEBI has sent show cause notice to Hindenburg Research (which was publicly published by the Noticee while trashing it) and have accused the former of colluding to use non-public information to build short positions against the Adani Group.

Our Founder, and Partner ๐Œ๐ซ. ๐’๐ฎ๐ฆ๐ข๐ญ ๐€๐ ๐ซ๐š๐ฐ๐š๐ฅ a former SEBI Officer mentioned that the US firm is neither registered with SEBI nor it is based out of India, its employees are not Indians, hence a jurisdictional issue would be a pertinent issue to deal with for Securities and Exchange Board of India. โ€œ๐’๐ž๐œ๐ญ๐ข๐จ๐ง 1 ๐จ๐Ÿ ๐ญ๐ก๐ž ๐’๐„๐๐ˆ ๐€๐œ๐ญ, 1992, ๐š๐ฉ๐ฉ๐ฅ๐ข๐ž๐ฌ ๐ญ๐จ โ€˜๐ฐ๐ก๐จ๐ฅ๐ž ๐จ๐Ÿ ๐ˆ๐ง๐๐ข๐šโ€™ and courts interpret โ€˜nexusโ€™ theory to ascertain whether a foreign entity would fall under the jurisdiction of SEBI,โ€ Mr. Agrawal added.

He also highlighted the complexities SEBI might face in banning entities like Hindenburg. He mentioned that such actions could raise further questions about SEBI’s role and intentions. He further noted that courts may need to examine the case’s historical and future implications, with Hindenburg potentially arguing that SEBI’s actions constitute malicious prosecution. This scrutiny could complicate SEBI’s position and necessitate a thorough review of the case’s regulatory context. The examination will determine whether issuing regulatory directives could suppress whistleblowing or free speech, while assessing whether the Hindenburg case provides sufficient facts and evidence to warrant enforcement action.

Another expert Mr. Ravi Prakash of Corporate Professionals views that SEBI might lead new global enforcement protocols and push for an international regulatory consortium to address challenges in the global securities market.

๐Œ๐ซ. ๐Š๐ก๐ข๐ญ๐ข๐ฃ ๐€๐ฌ๐ญ๐ก๐š๐ง๐š, Singhania & Co. (S&Co.) expressed his views how Hindenburg would not be exempted from the violation mentioned by SEBI in the show-cause notice, specifically Regulation 12A of the SEBI Act, 1992, and Regulations 3 and 4 of the PFUTP Regulations, 2003.

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