THURSDAY THEMES
A 4 min read about all the Matters that Matter
Hey buddy, Glad to see you here! Welcome to Thursday, 4th January 2024’s Matters that Matter. Happy Reading!
1. SC’s verdict on SEBI’s probe into Adani-Hindenburg case
On Wednesday, the Supreme Court rejected demands for a court-monitored probe by the Central Bureau of Investigation or a Special Investigation Team (SIT) into allegations raised against the Adani Group companies by US-based short seller Hindenburg Research in a January 2023 report.
The Court also asked the Centre to:
probe the loss that Indian investors have sustained as a result of the volatility caused by the short positions taken by Hindenburg Research and any other entities acting in concert with Hindenburg Research and
enquire into whether there was any violation of law by the entities, which engaged in short-selling on this occasion.
Disposing a batch of four petitions filed in the wake of the Hindenburg Research report, a three-judge bench said, “SEBI has prime facie conducted comprehensive investigation… no apparent regulatory failure can be attributed to SEBI based on the material before this Court. Therefore, there is prima facie no deliberate inaction or inadequacy in the investigation by SEBI.”
Short selling refers to the practice of selling shares without owning them. Short sellers take the view that share prices will fall. They borrow shares to sell and later purchase the same shares at a lower price and profit from the transaction.
The two aspects of the Hindenburg Research allegations against the Adani Group, which the market regulator SEBI is still probing, are:
ownership of 12 Foreign Portfolio Investors (FPIs) who hold stakes in the companies of the group and
short sellers in Adani shares during January 18-31 last year (around the time of the release of the Hindenburg report.
With the SEBI having completed its investigation in all but two matters concerning the allegations raised, some of the arguably more contentious issues surrounding the episode remain unanswered.
In its status report, SEBI said that “many of the entities linked to these foreign investors are located in tax haven jurisdictions; thus, establishing the economic interest shareholder of the 12 FPIs remains a challenge”.
While it would have served little purpose were the Supreme Court to order a large-scale probe into the Hindenburg allegations, it might have been prudent to allocate more resources, draw in more expertise, and give the ammunition that SEBI really requires to expedite the probe in a time-bound manner.
The volatility in the stocks of the Adani Group comes from the concerns in the market about SEBI’s ongoing investigation not coming to fruition. SEBI thus needs to take its investigations to a logical conclusion.
2. Hamas leader’s killing in Lebanon threatens widening of war
One of Hamas’s most senior officials, Saleh al-Arouri, was killed in a drone strike in Beirut, Lebanon, on Tuesday. The drone hit a Hamas office located in Beirut’s southern suburb of Dahiyeh, a Hezbollah stronghold. The Israeli government is yet to publicly claim responsibility for the attack, but one Israeli and two US officials said that Israel was behind the strike.
What does his killing mean for the Israel-Hamas conflict?
Saleh al-Arouri was one of the top-ranking officials of Hamas, and his death comes as a major blow to the group. However, Hamas’s political leader, Ismail Haniyeh on Tuesday said the organization’s operations would not be affected. Analysts believe that the fighting between Israel and Hezbollah would escalate as Saleh al-Arouri was killed in the heart of Lebanon. Soon after the incident, Hezbollah vowed not to let the assassination go without “retaliation or punishment.” Meanwhile, Israel is on high alert.
Deadliest militant attack to target Iran since its 1979 Islamic Revolution
Two bombs exploded minutes apart on Wednesday at a commemoration for a prominent Iranian general death in a US drone strike in 2020, killing at least 103 people.
No one immediately claimed responsibility but Iran has multiple foes who could be behind the assault, including exile groups, militant organizations and state actors. While Israel has carried out attacks on Iran over its nuclear program, it has not conducted mass casualty bombings. Sunni extremist groups including the Islamic State have conducted attacks that killed civilians in Iran, though not in relatively peaceful Kerman.
While Iran’s top officials vowed to respond harshly to the “cowardly act,” a Houthi spokesman sought to link the blasts to Iran's “support for the resistance forces in Palestine and Lebanon”. Though he did not specifically blame anyone for the attack, it raises serious concern considering the already violent situation in the region, with the war in Gaza feared to widen.
- References and Excerpts from The Indian Express
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