SEBI has asked the Supreme Court to grant an extension of time by six months to complete its probe into Adani group of companies accused of "accounting fraud" and "brazen stock manipulation" as per January 25 report by the US short seller firm Hindenburg.
The market regulator was told by the top court on March 2 to "expeditiously conclude” the investigation within two months and file a status report.
However, in its application, SEBI said, "In order to arrive at verified findings, it would be just, expedient and in the interest of justice” that the court extends time, at least by six months to conduct and conclude a proper investigation, as directed by it on March 2.
The application stated that for ascertaining possible violations related to misrepresentation of financials, circumvention of regulations and/or fraudulent nature of transactions in respect of 12 suspicious transactions, given the complexity of the matter, SEBI in the ordinary course would take at least 15 months for completion of the investigation of these transactions, but, is endeavouring to conclude the same in not less than six months.
On the Hindenburg Report allegations related to 12 suspicious transactions, the regulator said that “the information received from the companies would require reconfirmation and reconciliation submitted and independent verification of the replies and documents/information.”
In respect of the investigation or examination relating to 12 suspicious transactions, prima facie, the SEBI said, it is noted that these transactions are complex and have many sub-transactions and a rigorous investigation of these transactions would require collation of data/information from various sources along with detailed analysis including verification of submissions made by the companies.
"This analysis would include detailed examination financial statements of listed entities and unlisted entities, offshore entities involved in the transactions, disclosures to stock exchanges, minutes of meetings of their board of directors and audit committee, bank statements and their connections/relations are amongst entities, etc," it said.
It also contended the investigation would also require obtaining bank statements from multiple domestic as well as international banks and as the bank statements would also be for the transactions undertaken more than 10 years ago, this would take time and be challenging.
"As is the case in most investigations, every layer of information received often leads to further layers of information that are required, sought, obtained and analysed and this process is particularly time consuming where there is a complex web of transactions," it said.
On March 2, acting on a batch of PILs, the Supreme Court had set up a committee headed by the top court's retired judge Justice Abhay Manohar Sapre to investigate if there has been a regulatory failure in dealing with the alleged contravention of laws pertaining to the securities market in relation to the Adani Group or other companies.
It had also ordered the SEBI to look into whether there has been a failure to disclose transactions with related parties and other relevant information and whether there was any manipulation of stock prices in contravention of existing laws in accounting fraud and "brazen stock manipulation".