Adani Fights US SEC Charges, Calls Case Legally Flawed and Beyond US Reach

The filing of this letter is a standard procedural step in the legal process for the handling of such matters in accordance with the procedural rules prescribed by the EDNY judge.

In the letter, the Defendants have briefly set out their grounds for dismissal of SEC's complaint, including that the court concerned lacks personal jurisdiction over the Defendants and the claims against them, the SEC's claims are impermissibly extraterritorial, the alleged misstatements by the Defendants are too vague and general for any reasonable investor to rely upon as a guarantee of any concrete fact or outcome, making them inactionable, and the Defendants' lack of involvement in the transaction bars the SEC's claims against them.

The SEC had filed a complaint alleging securities fraud under the Securities Act of 1933 and Securities Exchange Act of 1934, which are the foundational pillars of US securities law, enacted in response to the 1929 stock market amidst the Great Depression.

Gautam Adani is represented by Sullivan & Cromwell LLP, while Sagar Adani's counsel is Nixon Peabody LLP and Hecker Fink LLP.

In September 2021, AGEL conducted a USD 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 the letter to the court.

The defendants say that 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.

The defendants also say that 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.

The letter to the court said that the US SEC relied on Gautam Adani's role as Chairman of Adani Green and membership in its management committee. The alleged conduct of Adani Green's Management Committee, including that it "reviewed and approved" the Offering Circular, is not sufficient to establish personal jurisdiction over Gautam Adani.

The letter to the court further said that Gautam Adani did not attend a single Management Committee meeting of AGEL from 2020 to 2024 and did not endorse the Offering or any statement made in the Offering Circular.

The US SEC had alleged that Gautam Adani, Sagar Adani and others orchestrated a USD 250 million-plus bribery scheme between 2020 and 2024 to secure solar energy contracts in India.

The defendants say that the Court lacks personal jurisdiction over defendants and the claims against them should be dismissed under Rule 12(b)(2).

The claims according to the lawyers "involve Indian Defendants, an Indian issuer, securities not registered with the SEC and not traded on U.S. exchanges, and underlying conduct alleged to have occurred exclusively in India."

The counsels said, the SEC has not alleged underwriters who purchased the bonds from AGEL were US institutions as they were not, or that the Subscription Agreement underlying the purchases was governed by US law as it wasn't.

"This case is thus conclusively beyond the reach of the US securities laws," the lawyers said.

- ANI