NEW DELHI: Remarking that the total loss suffered by Indian investors in the wake of Adani-Hindenburg issue was in the range of several lakh crores, the Supreme Court on Friday asked SEBI to come back with the changes required within the regulatory framework to protect Indian investors from instances such as the rout of Adani stocks.
A bench of Chief Justice of India (CJI) DY Chandrachud, Justices PS Narasimha and JB Pardiwala observed that the stock market is now a place where investment is made not only by big-time investors but also by the middle class and said the SC's primary concern was protecting investors against such volatility.
"The point is that total loss suffered by Indian investors was in the range of several lakh crores in investor value. How do we ensure going (about fixing this) in the future? Do we have robust mechanism in place? Today capital is moving seamlessly. How do you ensure that Indian investors are protected?
"These are small investors, young lawyers sitting in the court, they have no control. How do you ensure that they are protected? How do we protect (them) going forward in the future? What role should we envisage for the SEBI?" CJI DY Chandrachud remarked while dealing with pleas seeking probe into the Hindenburg Research report on Adani firms.
"Today, India was not what it was in 1990 and also now this stock market isn't a place where big investors invest but investment is made by whole spectrum of middle class," the CJI further remarked.
The bench during the hearing also suggested for constitution of a committee consisting of experts from financial sector for strengthening the existing financial mechanisms and for SEBI to conduct a "threadbare analysis" with regards to the power that it has and the powers which it further needs for dealing with such issues.
"We have indicated to SG (Solicitor General) the concern with regards to ensuring that regulatory mechanisms within the country are duly strengthened to ensure that Indian investors are protected against certain volatility which has been witnessed in the recent two weeks. That in turn would require assessment related to regulatory framework, relevant causal factors and the need for putting into place robust mechanisms to protect the investors if required. We have also asked the SG if the govt would be willing to accede to the consitution of an expert committee. We have also requested the SG to submit a brief note, both factual and legal, by next Monday," the court said in its order.
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Solicitor General Tushar Mehta for SEBI submitted that the issue is being monitored "closely by SEBI".
"SEBI is on top of the matter but we'll respond to your lordships... It'll be premature for me to answer the cause but the trigger point was the report... There are regulations in place dealing with the issues and we are also concerned about the investors," Mehta said.
While Sharma in his plea has sought an inquiry against short sellers Anderson and his associates (in India/USA) for exploiting innocent investors via short selling, Tiwari in his plea has sought the constitution of a court-monitored committee for investigating the Hindenburg research report's allegations.