Capital markets regulator SEBI on Monday told the Supreme Court that its 2019 rule changes do not make it tougher to identify beneficiaries of offshore funds, and action will be taken if any violation is found or established.

SEBI said it has continuously tightened rules concerning beneficial ownership and related-party transactions - key aspects in the allegations of Adani Group manipulating its stock price.

A Supreme Court-appointed expert committee had in an interim report in May stated that it saw “no evident pattern of manipulation” in billionaire Gautam Adani’s companies and there was no regulatory failure. It, however, cited several amendments the Securities and Exchange Board of India (SEBI) made between 2014-2019 that constrained regulators’ ability to investigate, and its probe into alleged violation in money flows from offshore entities has “drawn a blank”.

Without making any mention of the status report of its own investigation into allegations against Adani Group, SEBI in its latest affidavit to the Supreme Court said it did not agree with the expert committee observation of difficulties in identifying holders of economic interest behind an offshore fund. It also differed with the panel observation that stocks will re-price if the markets feel actions taken in the past by the company were not desirable, saying even if the market may re-price the stocks of the company based on the past transactions, “there is no bar on SEBI to examine any securities laws violations because re-pricing of the stock has happened.”

SEBI indicated it does not agree with the expert committee’s views and action will be taken if any violation is found/established.

After a report of US short-seller Hindenburg Research alleging accounting fraud, stock market manipulation and improper use of offshore entities by Adani Group stirred a political row and triggered a rout in the conglomerate’s stocks, dethroning Adani as the world’s third richest man, the Supreme Court had on March 2 constituted the expert committee to investigate if there was any failure to disclose transactions with related parties and if stock prices were manipulated.

The committee was to work in parallel with the probe by Sebi into offshore entities investing in the Adani Group. The regulator was first asked to complete the probe in two months and then given another three months till August 14. In the affidavit, SEBI said its 2019 rule changes in fact “tightened the disclosure requirement” related to beneficial owners.

In its 43-page filing, SEBI opposed the expert committee’s recommendation that a firm timeline for the regulator to complete its investigation must be “embedded into the law”, saying prescribing such limits “may compromise the quality of investigation”, create constraints and increase litigation.