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Adani Group under regulatory scrutiny from U.S. authorities

It seems like Gautam Adani can’t take a break from all the growing suspicions around his business empire since the release of the report from the short-selling investment firm Hindenburg Research. According to the Economic Times, billionaire Gautam Adani’s conglomerate Adani Group last Friday said it was not aware of any subpoena being issued to investors by authorities in the United States. It also reiterated that its various issuers’ groups remain confident that the disclosures issued by the company are full and complete.

According to Bloomberg, The Securities and Exchange Commission (SEC) in the United States and the U.S. Attorney’s Office in Brooklyn, New York, are looking into the representations made by the Adani Group to its American investors following short-seller Hindenburg’s report.

The report quoting said that the institutional investors with large holdings in the Adani Group had received inquiries from the Attorney’s Office in Brooklyn and SEC asking for information on what the Adani Group told the American investors. The information requested from U.S. prosecutors does not necessarily means that criminal or civil proceedings will be filed, according to Bloomberg.

Adani Share Price, 6/23/2023

source: Google Finance

The launch of the investigation from U.S. authorities led to a significant decline in Adani stocks, plummeting the Indian tycoon’s personal fortune, which is tied to the company. Indeed, the conglomerate faced a significant slide in the share prices of its listed companies, resulting in a market capitalization loss of over $150 billion. Although the stocks have partially regained lost ground, the combined market capitalization remains nearly $100 billion lower.

It is undeniable that the release of the report took a massive blow to the Indian conglomerate. Today, investors are more than ever suspicious of Gautam Adani’s credibility. Several investors divested their stakes, while others reduced their holdings within the group.

The company has been embroiled in controversy since the turn of 2023, when Hindenburg accused Adani of various wrongdoings to alleged corporate governance issues. Following this, many petitions were filed in the U.S. Supreme Court to safeguard the interest of retail investors. Last May, an expert panel constituted by the Supreme Court to oversee investigations into the Adani Group had said that prima facie, it was not possible to conclude whether there had been a regulatory failure in the case.

The real question to ask ourselves is whether or not the Adani Group will be able to recover from this corporate turmoil. To be frank, it seems quite unlikely. Investors lost confidence in the Indian conglomerate, and confidence isn’t something that could be won back easily.

Hindenburg would have had to publish its report to bring down an entire continental business empire.


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