They argue the lawsuit lacks substantive grounds and falls outside US jurisdiction, claiming insufficient connections to the US and no direct involvement in the bond offering.
Explorer
Adani Moves US Court To Dismiss SEC Fraud Case, Challenges Jurisdiction
In a pre-motion letter submitted ahead of a planned April 30 filing, the Adanis, through their legal counsel, outlined multiple grounds on which they believe the lawsuit should be dismissed.
The SEC had initiated the case in November 2024, alleging that investors were misled due to the non-disclosure of an alleged bribery scheme involving Indian state officials.
Source : IANS
- Adanis seek dismissal of SEC fraud lawsuit in US court.
- They argue case lacks jurisdiction and substantive grounds.
- Bond issuance outside US, no investor losses alleged.
Billionaire Gautam Adani and his nephew Sagar Adani have approached a US court seeking dismissal of a securities fraud lawsuit filed by the US Securities and Exchange Commission (SEC), arguing that the case falls outside American jurisdiction and lacks substantive grounds.
The development marks a fresh legal turn in the case linked to a 2021 bond issuance by Adani Green Energy Ltd (AGEL), as the Adanis contest both the scope and validity of the SEC’s claims, reported PTI.
Legal Pushback Ahead of Key Motion
In a pre-motion letter submitted ahead of a planned April 30 filing, the Adanis, through their legal counsel, outlined multiple grounds on which they believe the lawsuit should be dismissed.
The SEC had initiated the case in November 2024, alleging that investors were misled due to the non-disclosure of an alleged bribery scheme involving Indian state officials.
However, the Adanis have argued that the complaint is legally flawed and fails to establish wrongdoing.
Jurisdiction at the Centre of Dispute
A key plank of the defence is that US courts do not have personal jurisdiction in the matter.
According to the filing, neither Gautam Adani nor Sagar Adani had sufficient connections with the United States, nor were they directly involved in the bond offering in question.
The defendants have maintained that the transaction does not meet the threshold required for US securities laws to apply.
Details of the Bond Sale
The case revolves around a $750 million bond sale conducted in 2021 by AGEL.
The Adanis stated that the issuance took place outside the United States under Rule 144A and Regulation S exemptions. The securities were initially sold to non-US underwriters and only later resold in part to qualified institutional buyers.
They further argued that the SEC complaint does not allege that Gautam Adani approved the issuance, participated in key meetings, or directed any actions towards US investors.
‘Extraterritorial Overreach’ Claim
The filing also contends that the SEC’s case represents an impermissible extraterritorial application of US securities laws.
It points out that the issuer is an Indian entity, the securities were not listed in the United States, and the alleged conduct occurred entirely within India.
Citing US Supreme Court precedent, the defendants said the SEC has failed to demonstrate the existence of a “domestic transaction”, a requirement for invoking US securities regulations.
No Investor Losses Alleged
The Adanis’ legal team also highlighted that the SEC complaint does not cite any investor losses.
They noted that the bonds in question matured and were fully repaid with interest in 2024, challenging the basis of the fraud allegations.
Disputing Bribery Allegations
The filing further rejects the underlying bribery claims, stating that there is no credible evidence to support such allegations.
It also argues that statements referenced by the SEC, including those related to ESG commitments, anti-corruption measures and corporate reputation, amount to general corporate optimism or “puffery”, which cannot be relied upon by investors as definitive assurances.
No Evidence of Intent to Defraud
The defence maintains that the SEC has failed to link either Gautam Adani or Sagar Adani to specific misleading statements or demonstrate any intent to defraud investors.
As a result, the defendants have sought dismissal of the case in its entirety.
What Happens Next?
The Adanis have indicated their readiness to appear for a pre-motion conference if required, as the case moves towards the next legal stage.
The outcome of the April 30 motion could prove crucial in determining whether the case proceeds further in US courts.
Frequently Asked Questions
Why are Gautam and Sagar Adani seeking to dismiss the SEC lawsuit?
What is the main jurisdictional argument made by the Adanis?
They contend that US courts lack personal jurisdiction because neither Gautam nor Sagar Adani had sufficient ties to the US, and the transaction doesn't meet the threshold for US securities laws to apply.
What specific details about the bond sale are cited by the Adanis?
The $750 million bond sale by Adani Green Energy Ltd in 2021 occurred outside the US under exemptions, with initial sales to non-US underwriters.
Does the SEC lawsuit allege any investor losses?
No, the Adanis' legal team highlighted that the SEC complaint does not cite any investor losses. The bonds in question have matured and were fully repaid.
How do the Adanis dispute the bribery allegations?
They reject the bribery claims, stating there's no credible evidence. They also argue that statements about ESG commitments and corporate reputation are general optimism, not definitive assurances.
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