AGEL bond sale dispute: Adani Group seeks dismissal of SEC lawsuit in US court

Gautam Adani and his nephew Sagar Adani have petitioned a US court to dismiss a lawsuit filed by the Securities and Exchange Commission (SEC) over a 2021 bond sale by Adani Green Energy Ltd. The Adanis argue the case is outside US jurisdiction, as the securities were issued in India and sold through non-US underwriters.

New York: In a key development, Gautam Adani, the Adani Group Chairman, and his nephew Sagar Adani have asked a court in the US to dismiss a lawsuit brought by the Securities and Exchange Commission (SEC) against them. They argued though their lawyers that the case falls outside the US jurisdiction and fails to establish any wrongdoing.

The defendants are seeking dismissal of the case in full and said they are prepared to appear for a pre-motion conference if required.

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Adanis said in a pre-motion letter that the SEC’s claims over a 2021 bond sale by the group’s renewable energy arm, Adani Green Energy Ltd (AGEL), are “legally flawed” on multiple grounds.

They argued that the court lacks personal jurisdiction, saying neither had sufficient contacts with the US or direct involvement in the bond offering.

The filing contended that the SEC’s case is impermissibly extraterritorial, noting the securities were not listed in the US, the issuer is Indian, and the alleged misconduct occurred entirely in India.

In September 2021, AGEL conducted a $750 million bond offering pursuant to SEC Rule 144A and SEC Regulation S, which are registration exemptions for private resales to qualified institutional buyers (QIBs) and non-US sales.

AGEL sold these bonds outside the US through an agreement to non-US underwriters, who then resold the Notes to QIBs. A fraction of those resales is alleged to have been made to “investors in the United States”.

AGEL was not a party to these transactions, the lawyers said in a letter.

The grounds for dismissal also include the SEC’s failure to state a claim on the basis that the defendants are neither based in the US nor conduct activities there that would grant the court jurisdiction and the alleged actions involve non-US entities outside the scope of US law.

Even if the claims are accepted at face value, the complaint fails to establish any actionable legal violation or meet the threshold required to proceed. The cited statements are neither materially false nor misleading and with no direct involvement in the offering, the defendants cannot be held liable, according to the letter.

Lawyers also stated the SEC complaint does not allege that Gautam Adani approved the issuance, attended key meetings, or directed any activity at US investors.

Citing US Supreme Court precedent, the defendants said the SEC failed to show any “domestic transaction”, a requirement for applying US securities laws.

The filing argues that statements cited by the SEC — relating to ESG commitments, anti-corruption practices, and corporate reputation — amount to non-actionable “puffery”, or general corporate optimism that investors cannot reasonably rely on.

The SEC has also failed to tie Sagar Adani to a single allegedly false or misleading statement, much less one directed at US investors, the letter pointed out.