New York: Billionaire industrialist Gautam Adani’s request to schedule a hearing to dismiss a US Securities and Exchange Commission (SEC) case of alleged fraud against him has been granted by a US judge.
The case represents an impermissible extraterritorial application of US law and that the SEC has failed to establish actionable claims under US securities laws, the plea states.
“The court has received Defendants’ letter requesting a pre-motion conference on their anticipated motion to dismiss the Complaint. The court grants that request and directs the parties to schedule the pre-motion conference,” the Eastern District Court of New York has stated in its order.
This development allows the Adanis to argue that the regulator’s complaint should be thrown out at an early stage, potentially avoiding a protracted discovery process and trial, as reported by IANS.
In November 2024, the SEC brought the case alongside a criminal complaint by the US Department of Justice, alleging that the Adanis sought to pay over $250 million in bribes to Indian officials to secure solar energy contracts and concealed the scheme from US investors and banks when they raised funds.
The counsels for Gautam Adani and his nephew Sagar stated in court that there was no credible evidence supporting the alleged bribery scheme. They pointed out that the SEC lacked necessary jurisdiction over the two men and that the alleged misstatements underpinning the case weren’t actionable.
While Gautam Adani is the chairman of the Adani Group, Sagar Adani is executive director at Adani Green Energy.
All allegations have denied all allegations, stating that none of its entities or executives have been charged under the US Foreign Corrupt Practices Act, and that Adani Green Energy — the renewable energy arm that raised the funds — is not a party to the proceedings.
Adani’s legal team has argued in filings that the case lacks sufficient jurisdictional basis
and fails to establish actionable claims under US securities laws.
The SEC’s claims over a 2021 bond sale by the Group’s renewable energy arm Adani Green Energy are legally flawed on multiple grounds, the plea argues.
It was pointed out that the $750-million bond sale was conducted outside the United States under Rule 144A and Regulation S exemptions, with securities sold to non-US underwriters and only later resold in part to qualified institutional buyers.
The SEC lacked personal jurisdiction, the Adanis argued, saying neither of them had sufficient contacts with the US or direct involvement in the bond offering.
The complaint does not allege that Gautam Adani approved the issuance, attended key meetings, or directed any activity at US investors, the lawyers said in the plea.
It also highlighted that the “SEC does not allege that there were any investor losses, and there were none. The bonds have matured, and Adani Green repaid all principal and interest in full to investors in 2024.”
It has also been contended that the SEC’s case is impermissibly extraterritorial, noting the securities were not listed in the United States, the issuer is Indian, and the alleged misconduct occurred entirely in India.
The Adanis cited US Supreme Court precedent, saying that the SEC failed to show any “domestic transaction”, a requirement for applying US securities laws.
The SEC charges against Adanis say nothing about where irrevocable liability was incurred and the mere fact, taken as true, that some downstream investors were located in the US is irrelevant to the case, it has been stated.
“The SEC’s claims here solely involve Indian Defendants, an Indian issuer, securities not registered with the SEC and not traded on any US exchange, and underlying conduct alleged to have occurred exclusively in India,” it said. “This case is thus conclusively beyond the reach of the US securities laws.”
The underlying bribery allegations have also been disputed, with the Adanis saying there is no credible evidence supporting such claims.
“The alleged bribery scheme relates to a solar energy project in India for the provision of renewable power in India. There is no allegation that any US company bid on the project, or that any US customer purchased energy in the project. In fact, there was no such US involvement,” the plea said.