Washington, July 4 (IANS) The US Department of Justice on Saturday told a federal court that investors suffered no financial losses in the securities at the centre of the criminal case against billionaire industrialist Gautam Adani, arguing that the absence of investor losses further undermined the government’s own prosecution and reinforced its decision to seek dismissal of all criminal charges.

In a detailed filing before the U.S. District Court for the Eastern District of New York, the Department said one of the central weaknesses in the securities fraud case was that investors had not suffered any financial harm.

“Not a single penny has ever been lost on the securities at issue,” the filing states. It adds that two of the notes involved in the case “are fully paid back,” while “the other two notes are currently paid up, with no indication of any change ahead.”

The Justice Department said that fact substantially weakened the criminal prosecution and weighed heavily in favour of dismissing the charges.

The filing also argued that the alleged victims were not ordinary retail investors but some of the world’s largest and most sophisticated financial institutions.

According to the Department, the securities were initially sold to highly sophisticated foreign-owned underwriters before being transferred to qualified institutional buyers, which in turn resold portions to sophisticated U.S. investors.

“It would have been difficult to prove that those ultra-sophisticated investment entities were tricked by what were platitudes in the offering materials,” the filing says, “let alone to the point of this being a criminal securities case.”

The Department further argued that even if prosecutors had succeeded in proving investors were misled, there would still have been no financial loss because the notes had either been repaid or continued to perform.

It, therefore, concluded that “there were no losses to recover” and no restitution that could be awarded in the criminal case.

The filing also questioned the legal basis of the securities fraud charges, arguing that the alleged misconduct occurred almost entirely in India and that many of the statements cited by prosecutors amounted to general claims about corporate integrity and compliance that courts have previously regarded as non-actionable corporate “puffery.”

Taken together, the Department argued, the lack of investor losses, the nature of the investors involved and the legal weaknesses of the case meant the allegations did not warrant criminal prosecution.

“Given all this, the allegations here would be appropriate for a civil resolution at the very most,” the filing states. It noted that the previous administration had also filed a parallel civil case based on the same facts and that “that case was settled earlier this year.”

The Justice Department said it had already concluded the securities charges should be dismissed before the civil settlement was reached, but added that the settlement further reinforced the view that pursuing criminal charges served no purpose.

The Department also sharply criticised the previous administration’s handling of the criminal case against Adani, telling a federal court the indictment was apparently intended as a “name and shame” exercise with little realistic prospect of ever going to trial.

Explaining its decision, the department argued that the prosecution was burdened by legal, jurisdictional and evidentiary weaknesses from the outset. It also suggested that the timing of the indictment reflected considerations unrelated to the merits of the case.

“The indictment was unsealed in the final days of the prior Administration, apparently as a ‘name and shame’ designed to levy accusations without any realistic prospect of a trial ever occurring,” the filing states.

–IANS

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