Did Adani shareholders bleed billions in single session over nothing?
A total of 72.87 lakh shares of the group's six listed stocks exchanged hands according to information from the Bombay Stock Exchange . The valuation of its Chief Promoter Gautam Adani too dipped a few billions within a few hours. Mumbai: The Monday trading session on the Dalal Street ended on a disastrous note for shareholders of Adani Group stocks. For others it may have seemed like a sequel to the drama series Scam 1992 . Shares of Adani Ports & Special Economic Zone saw the max value destruction of 8.36 percent within the session. 38.58 lakh shares exchanged hands. Trade on Adani stocks were so choppy that at one instance Adani Enterprises hit lower circuit of Rs 1281.20. But it ended the day at Rs 1,501.25. That Adani stocks, which otherwise performed well in the last twelve months, was in the red came as a surprise. The shares dropped out of favour after a report from Economic Times claimed that the NSDL froze accounts of three FPIs (Foreign Portfolio Investors) with significant ownership of Adani stocks. Markets were narrated that the NSDL was likely to have frozen the accounts of Albula Investment Fund, Cresta Fund, and APMS Investment Fund for failing to comply with KYC norms. These entities are reported as owning Adani stocks worth Rs 43,500 crores as of 11th June 2021. Also, these three FPIs were among Adani's top 12 investors and owned anywhere from 2.1% to 8.91% stakes in five of Adani Group companies as of March 31, 2020. According to the ET report, the action was taken after the entities failed to update revised KYC norms for FPIs. Custodian bankers were quoted as saying that "insufficient disclosure of information regarding beneficial ownership under the Prevention of of Money Laundering Act, 2019" could have been reason for freezing of funds. The NSDL website confirmed that the demat accounts related to the three entities were frozen as of May 31, 2021. According to OpenCorporates, the three entities were incorporated between 2005-07 with a common address -- 33, Edit Cavell Street, Port Louis, Mauritius. Markets also believed that with accounts frozen, the Mauritius-based FPIs could neither buy nor sell their holdings in the Adani Group. The carnage on D-street had already caused much damage between 10:00 - 11:00 hrs IST, but a clarification from the Adani Group was sent to the exchanges by 15:00 hrs. Adani called it (the ET report) an "erroneous" one. "We regret to mention that these reports are blatantly erroneous and is done to deliberately mislead the investing community. This is causing irreparable loss of economic value to the investors at large and reputation of the group," said the company. The company stated that it "requested the Registrar and Transfer Agent, with respect to the status of the Demat Account of the aforesaid funds and have their written confirmation vide its e-mail dated 14th June, 2021, clarifying that the Demat Account in which the aforesaid funds hold the shares of the Company are not frozen." After the end of the trading hours, the NSDL was quoted in news reports as confirming that there was no freezing activity on the demat accounts of the three entities related to the Adani shares. A Reuters story quoted an NSDL official as claiming "The freeze is on accounts of the funds that hold certain other securities and is not new, the source said. "NSDL hasn't taken any action now..."  Recent analysis from Bloomberg and other journals mention the risks of FPIs concentrating their ownership in Adani. The three Mauritius entities along with Elara India Opportunities Fund had put more than 95 percent of their money in Adani and its group firms. Such ownership not only risks the fund's money but also has propensity to degrade wealth for retail investors when confusion occurs. Meanwhile, here are some responses from Twitter:    Another scandal hard to prove outside the black box of information available with SEBI tracking systems is the return of an operator of the past who is relentlessly rigging prices of one group. All through foreign entities! His speciality & that of a former FM. Nothing changes!  Sucheta Dalal (@suchetadalal) June 12, 2021  I have seen evidence of the violations by the Trapese Artist Adani of the Prevention of Money Laundering Act, a matter for the Enforcement Directorate to prosecute. But PM Modi must get a background check of ED top officials before ED prosecution is launched to avoid sabotage  Subramanian Swamy (@Swamy39) June 14, 2021