Adani’s ‘white knight’ GCQ Partners to pay $500,000 fine to US markets regulator SEC

GQG rode to the Adani Group’s rescue in 2023 and invested an estimated $4.6 billion after the group’s shares were battered by the revelations in the Hindenburg Research report

Kolkata, September 27, dmanewsdesk: GQG Partners, which invested several billion dollars in the Adani Group last year, has agreed to pay a $500,000 fine to the US regulator for violating what are called ‘whistleblower rules’. These rules are designed to protect people who report potential securities law violations to the US financial market regulator, the Securities and Exchange Commission (SEC).

The SEC charged GQG with signing non-disclosure agreements with 12 people it was looking to hire, “that prevented them from disclosing confidential information about GQG, including to government agencies”.

GQG came riding like a white knight to the Adani Group’s rescue in 2023 with an estimated $4.6 billion investment. GCQ pumped in the funds after the Adani Group’s shares were battered by a US hedge fund report accusing the conglomerate of “blatant” fraud and share price manipulations. The valuation of the group, which strongly denied the accusations by Hindenburg Research, cratered by almost $100 billion after the bombshell report became public.

“Whether through agreements or otherwise, firms cannot impose barriers to persons providing evidence about possible securities law violations to the SEC, as GQG did,” said Corey Schuster, co-chief of the SEC’s Asset Management Unit.

In one case, the SEC said that GQG had signed a non-disclosure agreement with an employee who ‘intended to report’ alleged securities law violations to the SEC. Says the SEC report: “GQG also entered into a settlement agreement with a former employee whose counsel had told GQG that he or she intended to report alleged securities law violations to the Commission.”

GQG is thought to have made huge returns from its investments in six Adani Group companies, made mostly over the course of 2023. One calculation is that it invested $4.6 billion and that is now thought to be worth around $12 billion at current valuations.

Gautam Adani, the group’s chief, is now thought to be worth around $84.4 billion, according to the Forbes Real-Time Billionaires list, which tracks the ups and downs of the planet’s wealthiest people on a real-time basis. However, the Bloomberg Billionaires Index, which also tracks real-time wealth movements, reckons Gautam Adani is now worth $105 billion. Both wealth trackers say he is India’s second-richest person after Mukesh Ambani.

GQG Partners is based in Fort Lauderdale in the US and describes itself as an “adaptable boutique investment manager dedicated to performance, growth and embracing diverse perspectives for discerning investors”.

GQG says it has assets under management worth $155 billion. Rajiv Jain is its founder and chief investment officer. The firm invests in emerging and other global markets.

The SEC order stated: “GQG violated whistleblower protection Rule 21F-17(a), which prohibits any action to impede an individual from communicating directly with the SEC staff about a possible securities law violation.”

GQG says that without admitting or denying the SEC’s findings, it “agreed to be censured, to cease and desist from violating the whistleblower protection rule, and to pay a $500,000 civil penalty”.

Source: The Telegraph online