The Securities and Exchange Board of India (Sebi) has given a clean chit to Gautam Adani, Rajesh Adani and key Adani Group firms — Adani Ports & SEZ, Adani Power, and Adicorp Enterprises — on all charges levelled by US short-seller Hindenburg Research. The explosive allegations of insider trading, market manipulation, and violations of public shareholding rules collapsed under scrutiny, Sebi said after a detailed probe.The regulator made it clear that none of the charges in the show-cause notice could be proved. It also confirmed there was no violation of the Sebi Act concerning fraudulent or unfair trade practices.The alleged transactions were deemed genuine business dealings and not fraudulent or violative of RPT disclosure norms, given the legal framework applicable during the investigation period, Sebi said in two separate orders.On January 24, 2023, Hindenburg Research accused the Adani Group of pulling off “the largest corporate fraud in history,” alleging stock manipulation, accounting irregularities, and use of offshore shell companies to artificially inflate share prices. It also claimed violations of public shareholding norms and raised concerns about the group’s high debt levels and related-party transactions. Adani Group shares tanked sharply soon after the allegations and the group’s market capitalisation plunged by around $150 billion and flagship Adani Enterprises tanked by 70 per cent.Earlier this year, the short-seller’s founder Nate Anderson announced the “disbandment” of the firm.“Having considered the matter holistically, I find that the allegations made against Noticees (Adani group firms and officials) in the show-cause notice (SCN) are not established. Considering the above, the question of devolvement of any liability on Noticees does not arise and hence the question of determination of quantum of penalty also does not require any deliberation,” Sebi’s whole time member, Kamlesh Varshney said in the order.“I hereby dispose of the instant proceedings against Noticees without any direction,” he wrote in the order.Story continues below this adAccording to the Sebi order, on merit, the impugned (related-party) transactions cannot be considered manipulative, fraudulent, or unfair trade practices. There is no allegation of siphoning off funds or diversion of money; all the amounts, along with interest, were fully repaid before the investigation began. Moreover, the transactions in question were not classified as related-party transactions.The show-cause notice (SCN) does not cite any evidence — other than the non-classification of these transactions as related-party transactions — that could support a finding of fraud. In the absence of any violation of the Sebi (LODR) Regulations, there is therefore no basis to treat the impugned transactions as fraudulent or manipulative, the order stated.Hindenburg in its report alleged that Adicorp Enterprises Pvt Ltd was used as a conduit to route funds from various Adani group companies to fund publicly listed Adani Power Ltd.“Despite Adicorp Enterprises’ modest financial profile, four Adani Group companies lent the company a total of Rs 620 crore ($87.4 million) in 2020. We found no disclosure of these transactions in the financial statements of the Adani Group lenders, several of which are publicly listed,” the Hindenburg report said. Given its net profit, it would take Adicorp Enterprises around 900 years to earn enough to pay back the loans even without interest, the Hindenburg report had said.Story continues below this adHindenburg had alleged that Adani entities used Milestone Tradelinks (MTPL) and Rehvar Infrastructure as conduits to channel funds, thereby avoiding disclosure as related-party loans. Milestone and Rehvar are two private entities named in Hindenburg Research’s January 2023 report. The claim was that Adani Group companies routed money through MTPL and Rehvar to and from Adani Ports & SEZ, Adani Power, and Adani Enterprises, potentially sidestepping the disclosure requirements under related-party transaction rules.Sebi’s show-cause notice had alleged violations of several Sebi regulations, including directors’ duties and Listing Obligations and Disclosure Requirements (LODR). However, the regulator noted that while funds were indeed rotated via Milestone and Rehvar, all loans were genuine, interest-bearing, and fully repaid. At that time, Sebi’s definition of related-party transactions under LODR did not cover such indirect transactions. The broadened 2021 amendments, effective April 2023, were prospective, not retrospective.Allegations against Gautam Adani, Rajesh Adani, and Jugeshinder Singh, CFO of the Adani Group, were not upheld, as there was no evidence of deliberate concealment or fraud. Regarding the conduit entities themselves, Sebi observed that although Milestone and Rehvar acted as intermediaries, their use was not unlawful under the rules prevailing during FY 2018–23.Sebi effectively closed the case, noting that while the transactions raised certain governance concerns, no legal violation existed under the regulatory framework in force at that time.Gautam Adani on Sebi clean chitStory continues below this adAdani Group Chairman Gautam Adani stated that after a thorough investigation, SEBI has confirmed what the group has consistently maintained — that the Hindenburg allegations were “baseless”. “Transparency and integrity” have always defined the Adani Group, he said in a post on ‘X’ platform“We deeply feel the pain of the investors who lost money because of this fraudulent and motivated report. Those who spread false narratives owe the nation an apology,” Adani said. “Our commitment to India’s institutions, to India’s people and to nation building remains unwavering,” he said