With Adani saying FPI ACs not frozen, ball in SEBI, NSDL court – The Hindu BusinessLine

Clipped from: https://www.thehindubusinessline.com/companies/with-adani-saying-fpi-acs-not-frozen-ball-in-sebi-nsdl-court/article34815638.ece

Adani Group stocks tumble up to 25%

With the Adani Group insisting that the demat accounts of the three foreign portfolio investors (FPIs) holding large stakes in its Group company stocks had not been frozen, the ball is now in the court of market regulator SEBI. For, the National Share Depository Ltd (NSDL) website continues to show the three FPIs on a list of accounts frozen along with 9,444 others, as of May 31.

Regulator ‘must clarify’

“News reports suggested that the FPI accounts were frozen and Adani has said that it was false. Now, it is for SEBI to come out with a detailed response as the onus is on the regulator to stop any kind of market manipulation. It is the shareholders who suffered on Monday as the share price of Adani companies crashed,” said a securities market lawyer.

Experts say that operators always on the look out for stocks that are ripe for short selling. The share price of Adani Group stocks had recorded multi-fold gains over the past one year. In fact, the Group had come in striking distance of overtaking the Reliance Industries Group in terms of market-cap.

On Monday, Adani Enterprises fell 25 per cent, Adani Ports 19 per cent and Adani Transmission, Adani Power, Adani Green Energy and Adani Total Gas were locked in 5 per cent lower circuit.

Erroneous reports: Adani

“We regret to mention that these reports are blatantly erroneous and are done to deliberately mislead the investing community. This is causing irreparable loss of economic value to the investors at large and reputation of the group,” Adani Enterprises said in a clarification.

NSDL, however, did not clarify whether the list uploaded on its website included even those accounts that had been activated again. Some of the big FPI names whose accounts were frozen in the past include Goldman Sachs Mauritius, Citi Group Global Markets Mauritius, Merrill Lynch International, HSBC Bank Plc AC (GDR), Emerging Markets Opportunities Fund, Lehman Diversified Fund, and Copthall Mauritius Investments.

KYC rules for FPIs

There is a set KYC rule that FPIs have to follow in terms of disclosures mainly on beneficial owners (BO). SEBI has given custodians the authority to register FPIs and these FPIs have to keep their list of BO ready when required. NSDL, when it receives complaints or information on suspicious FPIs, seeks a list of BO from them. When there is no response, NSDL freezes their account till the information sought is received.

Lawyers say that accounts can also be frozen for simple violations such as not linking PAN with bank accounts. SEBI or NSDL has to come out with the facts in the case since it impacts hundreds of shareholders, said a market expert.

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