Gautam Adani, Sagar Adani consent to $18 million penalty proposed by US market regulator to drop bribery case

The United States Securities and Exchange Commission (SEC) has proposed civil monetary penalties of $18 million against Gautam Adani and Sagar Adani in a case concerning false and misleading statements made in connection with a 2021 bond offering by Adani Green Energy Limited.

The SEC has proposed a $6 million penalty against Gautam Adani and a $12 million penalty against Sagar Adani. These have been consented to by the Adanis without admitting or denying the allegations in the SEC complaint.

The penalties form part of proposed final judgments filed by consent before the United States District Court for the Eastern District of New York on May 14. They are now subject to court approval.

These penalties will, however, absolve the Adanis only of civil consequences.

The SEC had earlier charged Gautam Adani and Sagar Adani with making false and misleading statements in connection with a $750 million bond offering by Adani Green Energy Limited in September 2021. The offering raised more than $175 million from investors in the United States.

According to the SEC’s complaint filed on November 20, 2024, Gautam Adani, founder of Adani Green, and Sagar Adani, its Executive Director, allegedly orchestrated a scheme to pay or promise bribes worth hundreds of millions of dollars to Indian government officials.

The bribes were linked to commitments to purchase energy at above-market rates which benefited Adani Green, the SEC said. The SEC alleged that the bribery scheme was ongoing when Adani Green issued the bond offering materials. Those materials, according to the SEC, touted the company’s compliance with anti-bribery principles and laws.

The complaint alleged that the statements on anti-corruption and anti-bribery efforts were materially false or misleading in light of the alleged bribery scheme.

Section 17(a) of the Securities Act deals with fraud in the offer or sale of securities. Section 10(b) and Rule 10b-5 prohibit fraud and misleading statements in connection with the purchase or sale of securities.

The proposed judgments also state that the penalty amounts would be sent to the United States Treasury. They further provide that no part of the funds will be returned to the defendants.

The consent documents also record that Gautam Adani and Sagar Adani cannot seek or accept reimbursement or indemnification from any source for the civil penalty amounts. They also cannot claim tax deductions or tax credits for the penalty payments.

The documents further state that the consent resolves only the claims asserted by the SEC in the civil proceeding. They record that no promise or representation has been made by the SEC regarding any criminal liability that may have arisen or may arise from the facts underlying the action.

The SEC's investigation was conducted by Nicholas Karasimas, Stewart Gilson and Christopher Colorado under the supervision of Alison Conn of the SEC’s New York Regional Office.

The litigation was led by Colorado, Karasimas and Gilson under the supervision of Thomas P Smith Jr and Daniel Loss.

Gautam Adani is being represented by Robert J Giuffra Jr of Sullivan & Cromwell LLP

Timothy D Sini of Nixon Peabody LLP is representing Sagar Adani.

Read SEC's press release here.