Hindenburg gets SEBI notice over Adani short bet, US firm calls IMAGEHindenburg gets SEBI notice over Adani short bet, US firm calls IMAGE

Sebi Charges Hindenburg of making ‘unfair’ profits from ‘collusion’ to use ‘non-public’ and ‘misleading’ information and induce “panic selling” in Adani Group stocks

New Delhi: US short-seller Hindenburg Research had shared an advance copy of its damning report against Adani Group with New York-based hedge fund manager Mark Kingdon about two months before publishing it and profited from a deal to share spoils from share price movement, according to market regulator Sebi.

The Securities and Exchange Board of India (Sebi), in its 46-page show cause notice to Hindenburg, detailed how the US short seller, the New York hedge fund and a broker tied to Kotak Mahindra Bank benefited from the over $150 billion routs in the market value of Adani group’s 10 listed firms post-publication of the report.

Sebi Accuses Hindenburg of Manipulative Trading in Adani Group Stocks

The Securities and Exchange Board of India (Sebi) has accused Hindenburg Research of engaging in unfair profit-making through collusion, using non-public and misleading information to induce panic selling in Adani Group stocks.

Hindenburg, which publicly disclosed the Sebi notice, responded by labeling it an attempt to silence and intimidate whistleblowers exposing corruption and fraud among India’s most influential individuals. The investigation revealed that bets against Adani Enterprises Ltd, the flagship firm of the Adani Group, were executed through Kotak Mahindra (International) Ltd (KMIL), a Mauritius-based subsidiary of Kotak Mahindra Bank Ltd.


According to Sebi’s notice, time-stamped chats between a hedge fund employee and KMIL traders were used to execute futures contracts selling in Adani Enterprises Ltd. Kotak Mahindra Bank clarified that its client Kingdon Capital Management, on whose behalf KMIL placed these bets, did not disclose any relationship with Hindenburg or the use of price-sensitive information.

The unfolding situation underscores regulatory scrutiny in the Indian financial markets and highlights the complexities surrounding allegations of market manipulation and insider trading. Stay tuned as the investigation progresses and further developments unfold in this high-profile case.

Calling the SEBI’s 46-page show cause notice an attempt at ‘intimidation’, Hindenburg wrote in a blog post that the regulator had made the “nebulous allegation” that Hindenburg’s report contained misrepresentations and inaccurate statements meant to mislead readers.

The New York-based firm termed the show cause notice as “nonsense” and “concocted to serve a pre-ordained purpose: an attempt to silence and intimidate those who expose corruption and fraud perpetrated by the most powerful individuals in India.”

Here is the full version of the Hindenburg statement:

It disclosed that Kotak Bank created and oversaw an offshore fund structure that was used by its “investor partner” to be against the conglomerate but hastened to add that it may “barely come out above breakeven” on its trade.

Hindenburg Claims Profit from Adani Shorts Amidst Regulatory Scrutiny

Hindenburg Research has disclosed earning $4.1 million in gross revenue from its investor relationship through gains related to Adani shorts, along with a minimal $31,000 from its short position in Adani’s US bonds.

The Adani Group has consistently denied all allegations, stating, “After 1.5 years of investigation, SEBI identified zero factual inaccuracies with our Adani research. Instead, the regulator took issue with aspects such as our use of the term ‘scandal’ in reference to prior instances involving Adani promoters and allegations regarding SEBI’s regulatory practices.”

Addressing questions surrounding its investment strategy, Hindenburg clarified, “Did Hindenburg collaborate with numerous firms to short Adani, generating hundreds of millions of dollars? No – we partnered with one investor, and after accounting for costs, our net gain on Adani shorts may only marginally exceed breakeven.”

Regarding their research, Hindenburg emphasized, “Our work on Adani was driven by ethical and investigative motivations rather than financial gain or personal safety concerns. We remain steadfastly committed to our findings.”

Hindenburg further commented on the SEBI notice received on June 27, highlighting ongoing challenges in getting substantive responses from Adani on their allegations. They reaffirmed their January 2023 report’s findings regarding offshore entities linked to Gautam Adani’s brother and associates, detailing significant financial transactions lacking related-party disclosures.

In response to SEBI’s allegations, Hindenburg criticized what they perceived as attempts to portray their legal disclosures as secretive or manipulative, asserting their transparency in disclosing their short position on Adani publicly and prominently.

Regarding SEBI’s handling of the matter, Hindenburg expressed concerns over the regulator’s approach, suggesting a bias towards protecting influential Indian businessmen from scrutiny.

As the investigation unfolds, Hindenburg remains resolute in its stance, advocating for transparency and accountability in corporate governance practices within India’s financial markets.

Stay informed as developments in this high-profile case continue to unfold, impacting perceptions of regulatory oversight and corporate transparency in the global financial landscape.


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