Adani stocks fall as US SEC plans email summons to Gautam Adani

Adani Group has a total of 10 publicly listed companies, which cumulatively lost over Rs 1 lakh crore in market capitalisation on Friday following the SEC’s latest move.

In a filing to the stock

exchanges late Friday, Adani Green Energy said, “The Company is not a party to these proceedings, and no charges have been brought against it. Further, as clarified in our intimation to the stock exchanges dated November 27, 2024 (1:16:32hrs), the Defendants have not been charged with violation/(s) of the United States Foreign Corrupt Practices Act i.e. there are no charges of bribery or corruption against the Defendants. The SEC proceedings are civil in nature.” The filing was in response to a query from the stock exchanges.

The SEC has been trying to serve summons to Gautam Adani and his nephew Sagar Adani for over a year, but has been unable to do so due to lack of assistance from India’s Ministry of Law and Justice, as per the SEC’s court filing. SEC’s formal communication to the Adanis about the case is seen as a prerequisite for the lawsuit to proceed in the US.

In November 2024, US prosecutors in New York indicted Gautam Adani and seven others for orchestrating a scheme to pay over $265 million in bribes to Indian government officials for securing power supply contracts in India. Simultaneously, the SEC moved court demanding a jury trial and other penalties against Gautam Adani, Sagar Adani, and Azure Power’s Cyril Sebastien Dominique Cabanes—a French national—on the same charges. The Adani group had dismissed the SEC’s allegations as baseless, adding that it will seek all possible legal recourse.

“Given Defendants’ actual knowledge of this litigation — demonstrated by public statements, regulatory filings and retention of US counsel — email service to their business addresses will provide effective notice,” the SEC said in its court submission.

The two rejections by the Indian government, the SEC filing said, were based on procedural reasons, such as signature and seal requirements, while adding these were not required in summons sent to individuals in other countries under the Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters. In the second rejection, the court filing said India’s law ministry appeared to raise doubts on whether the SEC had the authority to request ‌ service of summons. The SEC said that it was unaware of “any alternative means of serving Defendants under Indian or international law”.

Apart from charges of bribery scheme, the SEC’s indictment also alleged that Gautam Adani and Sagar Adani “not only concealed the bribery scheme from financial institutions and investors in the US and elsewhere but also caused others to make false and misleading statements regarding their awareness and knowledge of the US government’s investigations and its subjects.”

The reasons why the SEC got involved, even as the alleged bribery scheme was in India, mainly pertain to the Adani group’s activities and presence in the US and its having American investors. The connection with the Adani group primarily pertains to an Adani Green corporate bond issuance in 2021, which involved US investors.

US laws, primarily the country’s Foreign Corrupt Practices Act (FCPA), prohibits certain classes of persons and entities from making payments to foreign government officials obtaining or retaining business. In other words, it is unlawful for such persons and entities to offer, promise, or pay bribes to government officials in other countries. These classes of persons and entities include certain foreign issuers of securities in the US and companies whose stock is publicly traded on US bourses.