NSE Includes Brokerage Firm Linked To Adani Group On Watch List

The additional surveillance measures (ASM) list includes Adani Enterprises, Adani Ports & Special Economic Zone and Ambuja Cements. In phase I, traders will be required to put in 100% margin. The NSE also added a firm run by a relative of Adani: Monarch Networth Capital. The increase in margins under ASM is undertaken to curb excessive speculations in stocks as it reduces the leverage. The ASM framework is a consultative process between the Securities and Exchange Board of India (Sebi) and the exchanges, to enhance market integrity and safeguard interests of investors, especially in times of unprecedented volatility, as is seen in Adani group stocks for the last few days. Since Hindenburg’s devastating report was published on 25 January, shares of Monarch Networth have crashed 40%, ending at ₹224 apiece on Friday. US-based short seller Hindenburg faulted the Adani Group on its decision to allow Monarch handle the offer for sale of Adani Green Energy in 2019 and, recently, was among the 10 banks for the ₹20,000- crore secondary share sale of Adani Enterprises. Earlier this week, Adani called off the FPO.

Hindenburg claimed privately-held Adani Properties is a shareholder in Monarch and alleged conflict of interest. It has also expressed dismay over Monarch’s appointment given that it was suspended by Sebi in 2011.

“Given the importance of maintaining SEBI compliance, one would have expected the Adani Group to have chosen experienced, credible book-runners to manage the deal. Instead, Adani Green Energy chose an entity it could likely influence, if not control outright," said Hindenburg.

“This close relationship seems to pose an obvious conflict of interest"

“Why did Adani choose Monarch Networth Capital, a small firm previously suspended and sanctioned by Sebi over allegations of market manipulation, to run the offerings, rather than a large, well-respected broker"

Ahmedabad-headquartered Monarch is owned by Rakesh Shah, Gautam Adani´s brother-in-law.

The Adani Group has not denied its partial ownership in Monarch but in its response last week said that it partnered with Monarch “for their credentials and ability to tap into the retail market."

Adani also dismissed Monarch’s previous legal run-in as a “1-month suspension more than a decade ago" and said it has “no further relevance."