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Adani Group stocks slide as SEC seeks email summons for Gautam, Sagar Adani in US fraud case
Adani Group faces heavy sell-off as $12.5 billion in market value evaporates amid SEC legal actions against founder and executives for alleged fraud.
Shares of Adani Group companies came under heavy selling pressure on Friday, shedding about $12.5 billion in market capitalisation, after a US markets regulator moved a court seeking permission to serve legal summons via email to founder Gautam Adani and group executive Sagar Adani in an alleged fraud and bribery case.
According to a Reuters report, the US Securities and Exchange Commission (SEC) filed a procedural request before a federal court in Brooklyn, New York, asking for alternative methods to serve summonses after India’s government declined two earlier requests to facilitate formal service.
The SEC said it had approached US District Judge Nicholas Garaufis seeking approval to serve the summonses through the Adanis' US-based legal counsel and via email, arguing that the defendants were already aware of the litigation. “Given defendants’ actual knowledge of this litigation - demonstrated by public statements, regulatory filings, and retention of US counsel - email service to their business addresses will provide effective notice,” the regulator said in its filing.
Stocks tumble across group firms
The news triggered a broad sell-off across Adani Group stocks. The conglomerate’s flagship firm, Adani Enterprises, emerged as the top percentage loser on the Nifty 50, plunging 10.65% to ₹1,864.2, even as the benchmark index closed 0.95% lower.
Other group companies settled with losses ranging between 3.4% and 14.54%. Adani Green Energy, cited as the beneficiary in the alleged bribery scheme, led the declines, falling 14.6%, followed by Adani Energy Solutions (down 12%), Adani Ports and Special Economic Zone (down 7.5%), and Adani Power (down 5.5%).
In total, Adani Group companies lost about $12.5 billion in market value during the session.
Background of the case
The developments trace back to November 2024, when US authorities accused senior Adani Group executives of participating in a scheme to pay bribes to Indian officials to secure electricity purchase agreements for Adani Green Energy. The SEC subsequently filed a civil lawsuit against Gautam Adani and his nephew Sagar Adani.
This civil action is separate from a criminal indictment by the US Department of Justice, which remains pending, court records show.
Under US law, foreign companies that raise funds from American investors are barred from paying bribes overseas or making false or misleading disclosures to solicit investments.
Why email summons?
While serving a summons is typically a routine legal step, the SEC told the court that its requests to the Indian government to facilitate service were unsuccessful, prompting it to seek permission for alternative methods.
“Market participants assumed there's nothing pending and that the group has been cleared, so the SEC filing seems to have come out of the blue,” said Ambareesh Baliga, an independent market analyst. He added that weak overall market sentiment amplified the reaction and that the issue could linger for at least another fortnight.
Adani Enterprises clarifies
In a late-evening filing to Indian stock exchanges, Adani Enterprises Ltd clarified that it is not a party to the legal proceedings referenced in media reports and that no allegations have been made against the company.
“There are no allegations made against the Company in, and the Company is not party to, these proceedings,” the firm said, responding to queries raised by the BSE and NSE.
The company reiterated its November 2024 disclosure, stating that the latest reports do not warrant any additional disclosure under SEBI’s Listing Obligations and Disclosure Requirements. It added that the developments do not have any bearing on its operations.
Other group firms, including Adani Green Energy, Adani Ports, Adani Total Gas and Adani Enterprises, echoed similar statements, describing the allegations as “baseless” and asserting that they would pursue all legal remedies to defend themselves.
