Adani group companies lose $12.5 billion in market value following SEC’s request for court approval to deliver summonses

Adani Group companies suffered a significant setback as their market capitalization dropped by a staggering $12.5 billion following a request from the U.S. Securities and Exchange Commission (SEC) to serve summonses to founder Gautam Adani and group executive Sagar Adani. The SEC sought court intervention to deliver the summonses in connection with alleged fraud and a $265 million bribery scheme.

Reports surfaced after Indian markets closed on Thursday that the SEC had made this procedural request, triggering a massive sell-off in Adani Enterprises, the conglomerate’s flagship company. On Friday, Adani Enterprises registered as the top percentage decliner on India’s Nifty 50 index, with its shares plummeting by 10.65% to 1,864.2 rupees by market close. Other group shares also experienced significant losses, ranging from 3.4% to 14.54%.

The allegations against Adani group executives stem from accusations by U.S. authorities in November 2024 that they were involved in a bribery scheme to influence Indian officials for the purchase of electricity generated by Adani Green Energy, a subsidiary of the conglomerate. It is important to note that the SEC’s civil case against Gautam Adani and Sagar Adani is separate from the criminal indictment brought by the U.S. Department of Justice against the Adanis and multiple other defendants, which remains ongoing based on court records.

Under U.S. law, foreign companies that raise capital from American investors are prohibited from engaging in bribery overseas to secure business deals and are also barred from soliciting investments based on false or misleading information. Despite facing challenges in serving summonses to the Adanis directly, the SEC has requested to serve the summonses on the Adanis’ U.S.-based legal representatives and email copies to them, with email service considered permissible under U.S. procedural rules due to the defendants’ awareness of the ongoing litigation.

Reacting to the accusations, the Adani Group has vehemently denied the allegations, labeling them as “baseless” and expressing its intent to pursue all available legal avenues to defend itself. In responses issued to Indian stock exchanges, group companies reiterated their stance from November 2024, clarifying that they are not party to the legal proceedings and have not faced any allegations or charges in connection with the case.

Market observers and analysts have expressed surprise at the SEC filing, with some highlighting the lack of clarity surrounding the next steps in the process. The uncertainty has led to concerns about the issue lingering for an extended period, impacting overall market sentiment and investor confidence. Ambareesh Baliga, an independent market analyst, noted that assumptions of the group being cleared of any wrongdoing have been challenged by the latest developments, suggesting that the situation could unfold unpredictably in the coming weeks.