Adani Group’s two stocks have been put under the first stage of the long-term additional surveillance measures (ASM) on the Bombay Stock Exchange (BSE) after the recent US indictment of Chairman Gautam Adani and others on alleged bribery charges.
Adani was allegedly indicted in New York, US, over his role in the multibillion-dollar bribery and fraud scheme. According to US authorities, the chairman of the ports-to-power conglomerate and seven other defendants agreed to pay Indian officials over $250 million in bribes to obtain solar contracts.
ASM is an initiative by the Securities and Exchange Board of India (SEBI) and exchanges in which securities are moved to either a short-term or long-term framework to protect investors’ interests. Adani Group’s stock has been put under the ASM framework due to its high volatility after the bribery charges.
In the short-term ASM, there are two stages. Stocks are retained in each stage as applicable for a minimum of 5/15 trading sessions and are eligible for review from the 6th/16th trading day onwards. The securities are further monitored and moved in trade-to-trade (T2T Segment), and 100 per cent of traded value will get blocked as margins, meaning no intraday leverage is given.
The parameters for shortlisting securities under the ASM framework include high-low variation, client concentration, number of price band hits, close-to-close price variation, and price earning ratio.
Besides, SEBI and the exchanges introduce various enhanced pre-emptive surveillance measures such as reduction in price band, periodic call auctions and transfer of securities to trade for trade segment from time to time.
Adani and his nephew Sagar are accused of orchestrating the scheme and misleading investors during a $750 million bond offering, which raised about $175 million from US investors. In the indictment unsealed by federal prosecutors in New York, Adani, 62, was charged with securities fraud, conspiracy to commit securities fraud, and wire fraud.
The charges include bribery of Indian government officials, securities and wire fraud, conspiracy to violate the US Foreign Corrupt Practices Act and obstruction of justice, false statements made in annual reports, and false statements made to the US government in relation to its investigation into the group.
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