Transparency on Trial: Supreme Court Investigates SEBI's Handling of Market Crash

Transparency on Trial: Supreme Court Investigates SEBI's Handling of Market Crash

The huge crash in Indian stock markets on June 4th, the day of the Lok Sabha election results, sparked a legal dispute. Advocate Vishal Tiwari has petitioned the Supreme Court for instructions to the Centre and market regulator SEBI to provide thorough investigations regarding the crash and the financial harm that investors eventually faced. Tiwari has filed an application in the ongoing Adani-Hindenburg case, which concerns claims made by US short-seller Hindenburg Research about accounting fraud and stock manipulation against the Adani Group.

In January 2023, the Supreme Court ordered SEBI to investigate any legal violations by Hindenburg or any other company that took short positions resulting in losses to Indian investors. In order to strengthen the regulatory frameworks and protect investor interests, the Supreme Court also mandated that SEBI and the government take into account the recommendations of an expert committee. Tiwari's application does not, however, state whether SEBI has finished its ongoing investigations into the Adani case or submitted any compliance reports to the court.

Considering media reports claiming that the June 4th market crash resulted in investor losses of an unprecedented Rs 20 lakh crore, Tiwari asserted that common people have a "right to know" how SEBI's investigation turned out. In a plea, he asserts that the results of the investigations should be publicly available.

The Crux of the Legal Battle: The need for SEBI to be transparent and responsible about the effectiveness of its investigations and put the expert panel's recommendations into practice is at the core of the issue. Tiwari's application raises important concerns about whether the regulatory systems have fallen short once more, resulting in further large investor losses, similar to the Adani crisis. The court battle also highlights how the market crash happened in relation to the election results. Tiwari has pointed out how exit poll assumptions of an NDA triumph had sent stocks skyrocketing, only for them to crash when the real results revealed the BJP would need allies to maintain power.

There are allegations against both the Home Minister and the Prime Minister. The Congress party's charges against Home Minister Amit Shah and Prime Minister Narendra Modi are fuel for the fire. Apparently having access to information on the real result, the opposition party has accused the two BJP leaders of causing the crash by providing "specific investment advice" before the poll results. A Joint Parliamentary Committee should investigate what the Congress refers to as the "biggest-ever stock market scam."

Regulatory Function of SEBI Under Scanner: In the end, the legal struggle Tiwari is actively highlighting SEBI's role as the primary watchdog of India's financial sector. There will be a close judicial examination of the regulator's handling of the Adani investigations, the alleged application of expert committee recommendations, and general regulatory supervision in preventing market manipulation. The Supreme Court's ruling on Tiwari's petition will have a huge impact because crores of common Indians invest their savings in the markets. It may spark urgently needed changes to restore investor confidence and prevent such unstable situations from happening again. Everybody is waiting to see how the Supreme Court will handle this crucial matter of safeguarding the rights of individual investors while guaranteeing a strong, open regulatory structure for the stock market.