The Supreme Court on Thursday formed an expert committee headed by former apex court judge, Justice Abhay Manohar Sapre, to investigate the causal factors and existence, if any, of regulatory failure, which led to investors losing crores due to the volatility in the securities market, following Hindenburg Research’s report accusing the Adani Group of manipulation of share prices and account fraud.

The committee consists of former chairman of the State Bank of India OP Bhatt, retired Bombay High Court judge Justice JP Devadhar, former chief of the New Development Bank of BRIC countries KV Kamath, co-founder of Infosys Nandan Nilekani and securities expert and lawyer Somasekhar Sundaresan.

“In order to protect Indian investors from the volatility of the kind witnessed in the recent past, we are of the view that it is appropriate to constitute an expert committee for assessment of the extant regulatory framework and for making recommendations to strengthen it,” a three-judge Bench led by Chief Justice DY Chandrachud observed.

The expert committee was requested to submit its report to the Supreme Court in a sealed cover within two months. Market regulator SEBI, agencies connected with financial regulations, fiscal agencies and law enforcement agencies have to cooperate with the expert committee.

SEBI probe

The court noted that SEBI is already investigating into the allegations made by Hindenburg against the Adani Group as well inquiring into “market activity immediately preceding and post the publication of the Hindenburg report to identify violations”. However, the court highlighted certain blanks in SEBI’s probe, details of which the court said were too early to cite.

The Bench ordered SEBI to keep the SC-appointed expert committee apprised of its investigation while clarifying that its “committee does not divest the SEBI of its powers and responsibilities in continuing with the investigation...”. Bringing the SEBI probe also into its ambit, the court directed the market regulator to complete its investigation within two months and submit its status report.