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India’s market regulator is scrutinizing at least three companies controlled by billionaire businessman Gautam Adani for alleged breaches of securities laws related to prevention of insider trading and inadequate disclosures, two people familiar with the probe said.

“The scope of the scrutiny is to ensure no insider traded unfairly and, secondly, the disclosures have been made adequately and in a timely manner so that public shareholders are protected from unwarranted risks," said one of the two people on condition of anonymity.

On 21 May, group founder Gautam Adani’s net worth touched $74.9 billion, winning him the tag of Asia’s second-richest man led by a massive rally in various Adani Group companies. The group’s market capitalization, however, fell sharply on 14 June after it emerged that National Securities Depository Ltd locked the accounts of three Mauritius-based funds with large exposures to the Adani Group over lack of disclosures pertaining to end-beneficiaries.

The Securities and Exchange Board of India (Sebi) is looking at whether Adani Ports, Adani Group’s transmission businesses and Adani Gas have made the required disclosures, the first person said.

“Sebi will examine if any unpublished price sensitive information (UPSI) has been misused for any potential insider trading in the stocks of the aforementioned companies either to influence the prices or to make unfair gains," the person added.

The regulator is also scrutinizing related-party transactions within the group to ensure companies have made adequate and timely disclosures, the people said, requesting their names not be disclosed.

On Monday, junior finance minister Pankaj Choudhary said in response to a query in Parliament that Sebi is investigating certain group companies for non-compliance. “The investigation relates to compliance with listing norm disclosures and corporate governance standards in terms of related party deals," said the first person cited above.

In response, an Adani Group spokesperson said: “We have always been transparent with all our regulators and have full faith in them. While we have always been fully compliant with applicable Sebi regulations, we have made full disclosure to Sebi on specific information requests from them in the past. However, we have not received any communication or information requests recently."

Following Choudhary’s remarks, shares of all six listed Adani firms fell, with Adani Total Gas dropping by the maximum daily limit of 5%.

The stocks continued their losing streak on Tuesday, with four of the six firms hitting the lower circuit. The two other firms fell about 2%.

Shares of Adani Green Energy surged more than 11-fold in March from its 52-week low level of 112.70 on 17 March 2020. Adani Green develops, builds, owns, operates and maintains utility-scale grid-connected solar and wind farm projects, and since listing on 18 June 2018, the company’s market value has risen more than 44-fold from 28 on BSE.

Adani Total Gas has rallied nearly ninefold till March this year from its March 2020 lows, while Adani Enterprises has surged nearly eightfold in the same period. Adani Transmission rose more than fivefold in the year till this March. Adani Ports and Special Economic Zone stock jumped 262%, and Adani Power gained 226% from March last year.

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