The Securities and Exchange Board of India (Sebi) may approach the Central government or law enforcement agencies to be able to get information from foreign jurisdictions in the Adani-Hindenburg case, stated a report by Business Standard.
As per the report, Sebi is awaiting details on end-beneficiaries of foreign portfolio investors (FPIs) in connection with the charges levelled by the US-based Hindenburg Research against the Adani Group.
The market regulator may refer the matter to ministries because some offshore regulators were not very forthcoming in providing the information sought, two people in the know told BS.
Sebi is learnt to have written to several regulators including those in Bermuda, Luxembourg, and Switzerland, seeking detailed information on some FPIs, learnt the market daily.
It is important to note that law-enforcement agencies can opt for judicial assistance through letter rogatory (LR) and mutual legal assistance treaties (MLATs) in getting information. LR is a formal request from a court to a foreign judicial body for assistance in an investigation, while MLAT requests can be made for collecting evidence and examining witnesses residing abroad.
Explaining the issue, a regulatory source told BS that Sebi could exercise information-sharing rights under its international memorandum of understandings (MoUs) entered into with overseas regulators. But in case the query raised is beyond the requirements, then getting such information could be challenging.
“Offshore multi-layerings and a back-end omnibus kind of structures are nothing new and have generally been established for varied structuring reasons. Since lots of these ultimate holding structures can also get regulatory shelter under local privacy laws, at times it may be difficult to get the clear picture on end-beneficiaries,” said Tejesh Chitlangi, senior partner, IC Universal Legal.
FPIs are required to inform Sebi as well as their custodians about their beneficial owners when there is any material change in their structure, ownership, or control. While seeking a six-month extension from the Supreme Court on Saturday, Sebi said it would require statements from multiple domestic as well as international banks, added BS.