New Delhi: Seventeen months after Hindenburg Research attracted global attention by releasing its report alleging major violations by Indian conglomerate the Adani group, the U.S-based short-seller said on July 1 that Indian securities market regulator SEBI has sent it a letter stating suspected violations over its short bet against the Indian business group.
Hindenburg described SEBI’s “show cause” notice as an attempt to intimidate it.
“In our view, SEBI has neglected its responsibility, seemingly doing more to protect those perpetrating fraud than to protect the investors being victimized by it,” Hindenburg said.
Incidentally, SEBI is also carrying out investigation against Adani to find out whether they were indeed guilty of violations as alleged by the Hindenburg report. The Indian regulator has to complete the investigation by August 14. It has been granted that deadline by the Supreme Court.
Hindenburg also alleged that Kotak Bank, an Indian private bank created and oversaw an offshore fund structure. This fund was used by its “investor partner” to bet against the conglomerate and it provided new details of trades that puzzled investors. But Hindenburg stopped short of naming this investor.
Hindenburg report on Adani
The short-seller alleged it made $4.1 million in gross revenue through “gains related to Adani shorts from that investor relationship” and only $31,000 through its short position of Adani’s U.S. bonds.
Hindenburg also alleged that SEBI has made the “nebulous allegation” that the short seller firm’s report contained misrepresentations designed to mislead readers.
The SEBI notice to Hindenburg lends a new twist to the episode that exploded on the Indian stock markets in early 2023, creating waves among investors.
After the Hindenburg Research report was published the Adani group market cap went down by $150 billion. The report made severe allegations of stock manipulation and accounting frauds in Adani group companies. The turmoil also put the group chief Gautam Adani out of the global top 20 billionaire list.
However, in the following months investor confidence was restored and Adani group shares are back in market rallies. Adani himself is back in the top millionaires list.
The Adani group has consistently denied the allegations Hindenburg labelled at it.
As reported by The Economic Times, neither the Adani Group nor Kotak Bank has reacted to the news of the SEBI letter to Hindenburg or its allegations.
Hindenburg has revealed that it has received a letter from Sebi that accuses it of violations. It lends a new twist to the Hindenburg-Adani controvery. Biz News Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today