Adani Group founder Gautam Adani, India’s and Asia’s second richest man, lost $10 billion (nearly Rs 73,250 crore) in an hour as crisis hits Adani group stocks. National Securities Depository Limited has frozen the accounts of three foreign funds Albula Investment Fund, Cresta Fund and APMS Investment Fund. He has shares worth more than Rs 43,500 crore in 4 companies of the Adani Group. According to the NSDL website, these accounts were frozen on or before May 31.
All three hold 6.82 per cent in Adani Enterprises, 8.03 per cent in Adani Transmission, 5.92 per cent in Adani Total Gas and 3.58 per cent in Adani Green. According to law firms handling custodian banks and foreign investors, these foreign funds may not have complete information about the beneficial ownership. Because of this their accounts have been frozen. Under the Prevention of Money Laundering Act (PMLA), it is necessary to give complete information about Beneficial Ownership.
What does account freeze mean?
An official said that usually custodians warn their clients about such action, but if the fund does not respond to this or does not follow it, then the accounts can be frozen. Freezing the account means that the fund cannot sell any existing securities or buy new ones.
In 2019, the capital markets regulator made KYC documentation for FPIs as per PMLA. The funds were given time to comply with the new rules till 2020. SEBI said that the accounts of funds that do not comply with the new rules will be frozen. According to the new rules, FPIs had to provide some additional information. These included disclosure of common ownership and personal details of key employees such as fund managers.
It is believed that SEBI is also probing the price manipulation of shares of Adani Group companies. In the last one year, the shares of these companies have jumped by 200 to 1000 percent. An expert in the matter said that SEBI had started investigation in this matter in 2020 which is still going on. SEBI did not respond to queries sent to it in this matter.