Guwahati: The Supreme Court on Friday requested a response from the Ministry of Finance and the statutory market regulator, SEBI, on how to ensure that Indian investors are protected against sudden volatility in the future after taking note of a recent market crash following a report by US short-seller firm Hindenburg Research on the Adani Group.
The Centre and the Securities and Exchange Board of India (SEBI) were questioned by a bench led by Chief Justice of India DY Chandrachud on the current regulatory environment and the necessity of establishing a strong system to protect investors.
Two petitions pertaining to the Hindenburg report were being heard in court. When scheduling the case for Monday, the court requested that SEBI inform it on that day on how to guarantee investor protection moving forward.
It asked SEBI to outline the current framework and suggest improvements to the legal system.
The bench also recommended the creation of a committee with members from the regulatory agency, experts in securities, experts in international financial law, and others, headed by a former judge.
The apex court also recommended that the regulatory body consider measures to change the law’s regulatory requirements so that going forward, Indian investors would be safeguarded from market shocks and meltdowns.
The court made it clear that this is an open debate in order to protect Indian investors and to make sure they are not the target of a witch hunt.
The court also highlighted that the stock market now is not like it was in the 1990s, when it was the sole preserve of the wealthy. The court observed that middle-class investors now have access to a large portion of the stock market.
Solicitor General Tushar Mehta asserted on behalf of SEBI that the organisation is “on top” of the problem at the same time.
One of the petitions submitted by attorney Vishal Tiwari sought to establish a commission to examine the Hindenburg Research report under the direction of a retired Supreme Court judge.
Another petitioner, lawyer ML Sharma, asked for an investigation into the American short-seller whose report caused shares of the Adani Group to fall on the stock exchanges.