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Supreme Court of India sets up Special Committee to Investigate SEBI’s failure, if any, and recommend measures to strengthen the regulatory laws:

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The Supreme Court of India heard a batch of petitions about the decline in the share price of Adani Group’s companies due to a report by Hindenburg Research, which alleged that the company had manipulated its share prices and violated SEBI regulations. The petitions sought the constitution of a committee to investigate the report’s contents and alleged violations, registration of an FIR against Hindenburg’s founder, and a court-monitored investigation by a Special Investigation Team (SIT) or the Central Bureau Of Investigation. (CBI) into the allegations of fraud.

The court suggested the constitution of an expert committee to review existing regulatory mechanisms in the financial sector. SEBI, in its note before the Supreme Court, said it had already initiated an inquiry into the allegations.

The court while noting that SEBI is seized of the investigation, the importance of SEBI’s role in maintaining a stable securities market to protect investors’ interests require the Committee headed by Justice Abhay Manohar Sapre, a former judge of Supreme Court of India to provide its report within 2 months on the below:

1. To provide an overall assessment of the situation including the relevant causal factors which have led to the volatility in the securities market in the recent past;

2. To suggest measures to strengthen investor awareness;

3. To investigate whether there has been regulatory failure in dealing with the alleged contravention of laws pertaining to the securities market in relation to the Adani Group or other companies; and

4. To suggest measures to (i) strengthen the statutory and/or regulatory framework; and (ii) secure compliance with the existing framework for the protection of investors.

Given the national and international ramifications of the Adani – Hindenburg Issue, the recommendation of this committee assumes great significance. These are interesting times in India and it remains to be seen how the entire issue pans out at the Supreme Court of India subsequent to 2 months.

The Supreme Court of India order has been attached for the reference of the readers.

Readers are welcome to send their views to Regstreet Law Advisors at info@regstreetlaw.com.

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