NEW DELHI: The Supreme Court on Friday asked the Centre to respond on Monday if some improvements could be brought into regulatory regime to protect small investors, who suffered losses in lakhs of crores in stock market, after the Hindenburg report on Adani group.
"We don't want to interfere in policy domain, but can it be considered if policy change required? May be SEBI can come back on Monday and give us report on the existing situation? Also, how can we strengthen existing regime," a three-judge bench led by CJI D Y Chandrachud told Solicitor General Tushar Mehta.
Taking up two PILs by advocates Vishal Tiwari and M L Sharma for probe into American shotseller firm's report, a bench led by Chief Justice D Y Chandrachud asked Mehta to consult the Finance Ministry if the Centre is contemplating robust mechanism to protect the investors to prevent such blood bath and sudden volatility in future.
The bench, also comprising Justices P S Narasimha and J B Pardiwala, "We are looking at a broader perspective, but we will tread with great caution."
The bench asked if we can contemplate having an expert committee, possibly from banking, investment area, headed by a wise guiding force in form of a retired judge.
"We are just thinking out aloud. It's a new world, capital inflows are seamless. It can happen again," the bench cautioned.
"You may consult the Finance Ministry too. We want an amicus. Give us a framework of the government, what areas needs to be worked on? The petition is not well thought-out but sometimes we have to go beyond this. Come back to us on Monday after instructions," the bench told Mehta.
The bench further said it does not want to cast any doubt about SEBI but its primary concern was to protect investors.
"You have financial law reform committees. Can you take a call on whether modification or monitoring of regulatory frameworks is required," the bench asked Mehta.
The Solicitor General said the trigger point was Hindenburg report which is outside our jurisdiction.
He maintained that the SEBI was on top of the matter and would respond to the PILs.
"US resident Nate Anderson of Hindenburg Research and his Indian entities hatched a criminal conspiracy and did short sale in hundreds of billion dollars prior and thereafter on January 25, 2023 when they released a concocted news as research report qua to the Adani Group of the companies, and squared up their short sell position at the lowest rate," the plea before the court claimed.
The petitioner raised legal questions whether SEBI was not duty bound to suspend trading in the short selling stock to protect investors and whether intentionally short selling to crash stock in share market to square up through concocted artificial means is not a fraud punishable under Sections 420 and 120-B of IPC along with the provisions of the SEBI Act.
The report by five-year-old Hindenburg Research about Indian billionaire Gautam Adani has led to a stock rout, erasing over US Dollor 100 billion from his empire and pushing him down on the global rich list.
