Sebi investigating if Adani group flouted disclosure rules

India’s capital markets regulator is looking into whether the Adani group violated rules mandating the disclosure of market-moving information, according to people with knowledge of the matter.

The Securities and Exchange Board of India has 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 people said, asking not to be identified as the details are private. 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, one of the people said.

Central to the query is a March 15 Bloomberg News report that US prosecutors were digging into whether an Adani entity—or people linked to the company, including its billionaire chairman—were involved in paying officials in India for favorable treatment on an energy project. 

In that article, the Adani Group said it wasn’t “aware of any investigation against our chairman” and that it was fully compliant with anti-bribery laws in India and elsewhere. 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.

On Wednesday, US prosecutors charged Gautam Adani with helping drive a $250 million bribery scheme to win solar energy contracts in India, and 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.

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 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 Thursday after the US indictment, before paring losses Friday.

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 shortseller Hindenburg Research last year — and is yet to disclose findings. Sebi can only file civil charges and disclosure violations typically attract a monetary penalty.

Sebi, BSE Ltd. and NSE Ltd. didn’t respond to emails seeking comment.