US Court Allows Adani Group to Challenge SEC Case on Jurisdiction Grounds

A United States federal court has allowed the Adani Group to seek dismissal of a civil enforcement action filed by the Securities and Exchange Commission (SEC), marking an important procedural development in the ongoing dispute. The court granted a pre-motion conference, enabling the group to formally argue that the case should not proceed.

This development does not decide the merits of the case but gives the Adani Group an opportunity to challenge the SEC’s jurisdiction before filing a full dismissal application. The company has maintained that the regulator has exceeded its authority by attempting to apply US securities laws to transactions conducted largely outside the United States.

At the core of Adani’s argument is the absence of a substantial US connection. The group has submitted that Adani Green Energy is not listed in the US and that the bonds under scrutiny were issued, sold, and settled outside American territory. It emphasised that these transactions were structured under Rule 144A and Regulation S exemptions.

According to the filings, the bonds were sold to non-US underwriters, and any later resale in the United States was undertaken independently by third parties. The group has argued that such downstream transactions cannot establish jurisdiction, as there was no direct involvement from the issuer in US-based activity.

The SEC, however, has argued that the use of the Depository Trust Company (DTC) in New York for settlement provides a sufficient connection to the US. In response, Adani has described this process as purely administrative, stating that it does not transform an offshore transaction into a domestic one.

The group has also challenged the substance of the allegations. It has stated that there were no investor losses, highlighting that the bonds were fully repaid with interest in 2024. It further argued that the ESG-related statements cited by the SEC were general in nature and do not amount to actionable misrepresentations.

Additionally, the Adani Group has denied allegations of bribery, asserting that they are unsupported and have been incorrectly framed as securities violations. It has also claimed that Gautam Adani had no involvement in the bond issuance, and that there is no clear link between Sagar Adani and any alleged misstatements.

The matter will now depend on whether the court accepts the jurisdictional challenge at the dismissal stage. If successful, the case may not proceed further, making this a crucial phase in the litigation.