The U.S. Department of Justice (DoJ) has told a federal court that investors suffered no financial losses in the securities at the centre of its criminal case against Adani Group Chairman Gautam Adani, while arguing that the Biden-era prosecution was legally flawed and likely to fail.

In a detailed filing before the U.S. District Court for the Eastern District of New York, the DoJ sought dismissal of all criminal charges, saying the case "should never have been brought" due to legal, jurisdictional and evidentiary weaknesses. It described the indictment, unsealed in the final days of the previous administration, as an apparent "name and shame" exercise with "no realistic prospect of a trial ever occurring."

The Department said one of the biggest weaknesses in the securities fraud case was the absence of investor losses. "Not a single penny has ever been lost on the securities at issue," the filing states, noting that two of the notes have been fully repaid while the remaining two continue to perform with no indication of default.

According to the DoJ, the securities were sold to sophisticated institutional investors rather than retail investors. It argued that it would have been difficult to prove that such experienced financial institutions were misled by what it described as broad corporate statements or "puffery." Even if investors had been misled, the Department said there were no financial losses, leaving no basis for restitution.

The filing also questioned the legal foundation of the prosecution, arguing that the alleged conduct was overwhelmingly centred in India, involving Indian nationals, government officials, contracts and electricity projects. It noted that Indian authorities had already investigated many of the allegations and found no actionable misconduct, suggesting that the jurisdiction with the strongest interest in the matter had already examined the issues.

The DoJ further stated that the allegations, at most, were suitable for civil resolution. It pointed out that a parallel civil case based on the same facts had already been settled earlier this year, adding that the Department had decided to seek dismissal of the criminal case even before that settlement.

In an unusually candid reassessment of one of its own highest-profile corporate prosecutions, the Department said the securities charges were fundamentally flawed and acknowledged it was "likely to lose on the merits" because of "extraordinary proof problems" and what it described elsewhere as "numerous catastrophic flaws."

The Department also rejected suggestions that its decision was influenced by prospective investments in theUnited States,saying the dismissal followed an extensive review of submissions from both prosecutors and defence counsel and had been reached before any discussions about future investments.

While the court has yet to rule on the dismissal motion, the filing marks a dramatic reversal in the government's position. After nearly two years of intense scrutiny that affected investor sentiment, wiped out billions in market value and placed the Adani Group under global focus, the DoJ has now publicly explained why it believes the prosecution was legally unsustainable from the outset.