Supreme Court Queries SEBI on Measures to Shield Investors from Market Volatility

In a recent session, the Supreme Court posed critical questions to the Securities and Exchange Board of India (SEBI) regarding its strategies to protect investors from the noticeable volatility within the stock market. A bench, led by Chief Justice D Y Chandrachud, along with justices J B Pardiwala and Manoj Misra, focused on the investor value lost due to market fluctuations.

Investor Protection Measures

The capital market's well-being is pivotal in fostering investor confidence. Solicitor General Tushar Mehta, representing SEBI, was asked to clarify the steps SEBI would take to alleviate the erratic nature of the stock market and safeguard investor interests. With the backdrop of the Adani-Hindenburg situation, where the market saw significant volatility, the Supreme Court's intervention showcases the increased scrutiny on regulatory bodies.

Regulatory Responses

SEBI's response highlighted ongoing and finished investigations, specifically into allegations against the Adani group. Out of 24 cases, 22 have concluded, the remaining reliant on information from foreign regulators. The court also discussed the mechanisms in place for short selling activities and the regulatory framework's effectiveness in current market conditions. Advocates, including Prashant Bhushan representing a petitioner, also brought forth arguments questioning the adequacy of SEBI's investigative processes.

The Role of Expert Committees

An expert committee appointed by the apex court had previously found 'no evident pattern of manipulation' in Gautam Adani's companies and identified no regulatory failure. However, the committee also pointed out amendments constraining SEBI's investigative capabilities. Despite challenges, suggestions made by the committee have not met with any objections in principle, indicating a potential enhancement of regulatory frameworks going forward.

Market Sentiments and the Adani Case

The Adani Group stocks experienced a downturn following accusations from Hindenburg Research, which claimed fraudulent practices and market manipulation. While the Adani Group has refuted these allegations, it underscores the importance of a resilient and transparent financial market that instills trust amongst investors.

investors, volatility, regulation