The Securities and Exchange Board of India amended regulations to benefit the Adani Group, a petitioner has alleged in an affidavit before the Supreme Court, Live Law reported on Monday.

“The frequent amendments brought into the regulations and definition have severely violated the spirit of SEBI Act,” the petitioner named Anamika Jaiswal alleged.

The Supreme Court is hearing four petitions seeking an investigation into the Adani Group after American firm Hindenburg Research in a report on January 24 alleged that billionaire Gautam Adani’s group was pulling off the “largest con in corporate history”. The Adani Group has rejected these allegations.

In March, the Supreme Court had asked the regulator to conduct an inquiry the Supreme Court set up an expert panel to probe possible regulatory failure related to the Adani Group. It also asked SEBI to investigate the allegations against the conglomerate.

Two months later, the panel said that prima facie it was not possible to conclude whether there had been any regulatory failure in the case. It had, however, noted that the SEBI has “drawn a blank” in its inquiry into suspected violations in foreign investments in the Adani Group and added that the investigation in the case could be a “journey without a destination”.

In August, SEBI told the Supreme Court that out of the 24 investigations in the Adani-Hindenburg case, 22 have been finalised, while the remaining two are currently underway, according to Live Law. The market regulator, however, did not detail its findings.

On Monday, the petitioner claimed that the amendment in the regulations of SEBI provided a “shield and an excuse” to the Adani Group “due to which their regulatory contraventions and price manipulations remained undetected”.

These included amendments to the rules related to the foreign portfolio investor, or FPIs, that mandated that participants in the stock market are obligated to ensure that they do not have opaque structures.

“This was amended by SEBI in 2018, whereby the ‘ultimate beneficial owners’ were redefined to have the same meaning as ‘beneficial owner’ as defined under the Prevention of Money Laundering Act [PMLA], the petitioner claimed. “Subsequently, in 2019, the ‘opaque structure’ clause in the FPI regulations was done away with altogether and replaced by ‘compliance with all the requirements under PMLA’.”

On August 31, an investigation by the Organised Crime and Corruption Reporting Project, or OCCRP, had named two associates of the Adani family – Chang Chung-Ling from Taiwan and Nasser Ali Shaban Ahli from the United Arab Emirates – who had made investments in the conglomerate’s stocks through “opaque” investment funds based in Mauritius.

Both Ahli and Chang, the OCCRP alleged, had longtime business ties with the Adani Group, particularly Vinod Adani, the brother of chairperson Gautam Adani. Since the two men were associates of the Adani Group, their investments possibly violated Indian stock market rules, which mandate that listed companies have a minimum 25% public shareholding, OCCRP alleged.

Jaiswal also alleged that SEBI amended the definition of “related party” in 2018 by adding a separate provision allowing a member or entity of the promoter group of a listed company to be deemed as a “related party” only if the shareholding of that person or entity was at least 20%, according to Live Law.

She claimed that the Supreme Court’s expert committee had cited the amendments “as an excuse” to declare that SEBI’s investigation into the allegations may be a “journey without a destination”.

SEBI has ‘conflict of interest’

The affidavit also alleged that the market regulator has a “conflict of interest” in investigating the allegations against the Adani Group. It said that the daughter of Cyril Shroff, who was a member of SEBI’s committee on corporate governance that looks after offences like insider trading, is married to Gautam Adani’s son.

“It is pertinent to also mention here that 5 out of 24 SEBI’s investigation reports are on insider trading allegations against the Adani Group companies,” the affidavit said. “Cyrill Shroff’s daughter is married to Karan Adani, son of Gautam Adani, showing a clear conflict of interest.”

The petitioner also said that in 2014, the Directorate of Revenue Intelligence had alerted SEBI about the possible stock manipulation by UAE-based entities related to the Adani Group. She alleged that SEBI suppressed and concealed this information and never conducted an investigation based on the alert.

The document obtained by the OCCRP, shared with Scroll, revealed that the regulator had known about the allegations for nearly a decade.

“There are indications that a part of the siphoned-off money may have found its way to stock markets in India as investment and disinvestment in the Adani Group,” Najib Shah, who was director general of DRI at the time, wrote to UK Sinha, the SEBI chairman, in the letter dated January 21, 2014.

“You should not expect me in all fairness to remember everything what happened nine years ago, given that I retired from SEBI six years ago,” Sinha had told Scroll when asked about the DRI letter. “I don’t recollect what the facts are.”

Sinha served as the chairperson of SEBI from 2011 to 2017, gaining two extensions under the Narendra Modi government. In March this year, he was appointed as an independent director of NDTV, months after the Adani Group took control of the news organisation.