12 Companies Benefitted From Short Selling In Adani Group Shares: Says Report (Image:www.instagram.com/gautam.adani/)
Twelve companies including foreign portfolio investors and foreign institutional investors (FPIs/ FIIs) based in tax havens were the top beneficiaries of short selling in Adani Group Shares, according to a report quoted as Enforcement Directorate (ED) findings to markets regulator Securities and Exchange Board of India (SEBI).
The conclusion was made by the ED after completing a preliminary investigation into the Hindenburg Research report and the followed market crash, the Indian Express reported.
In January 2023, Hindenburg Research LLC, a US based research firm, has published a report presenting evidences against the Adani Group companies.
According to the report, the conglomerate had “engaged in a brazen stock manipulation and accounting fraud scheme over the course of decades”, reported the Indian Express. Stocks of Adani Group companies have seen a drastic fell shortly after the report released.
“The company was shocked by the report. It is a “malicious combination of selective misinformation and stale, baseless and discredited allegations”, said Jugeshinder Singh, Chief Financial Officer of the Adani Group then.
According to the Indian Express, the Enforcement Directorate had shared its findings with markets regulator Securities and Exchange Board of India (SEBI) in July.
The short sellers includes three from India and four from Mauritius. None of these had disclosed their ownership structures to income tax authorities.
Short selling is an investment technique. It occurs when an investor borrows a security and sells it on the open market, and later bought back for less money.
Here sellers bet on, and makes profit from a drop in the share prices. This can be contrasted with long investors who want the price to go up.
According to the ED report, Some of the short selling companies had allegedly opened positions two to three days before the Hindenburg report was published on January 24. Some others were dabbling in short trades for the first time.
Foreign investors that registered with SEBI are allowed to trade in derivatives, the financial instruments that allow short-term trades by offsetting market risks, reports NDTV.
ED has also mentioned about irregular earning patterns of some of the short sellers. The SEBI had passed an order against the promoter of one of the Indian firms for misleading investors, the report added.
The Supreme Court had asked SEBI to investigate the Hindenburg”s allegation against the Adani Group and submit a report. The top court also appointed a panel of experts for the purpose.
The panel of experts appointed by the Supreme Court had earlier submitted there was no price manipulation on the part of Adani Group and that the conglomerate had taken necessary steps to comfort retail investors.
The Directorate of Enforcement is a multi-disciplinary organization mandated with investigation of offence of money laundering and violations of foreign exchange laws.
Adani Group is an Indian multinational conglomerate, headquartered in Ahmedabad. Founded by Gautam Adani in 1988 as a commodity trading business, the Group”s businesses include port management, electric power generation and transmission, renewable energy, mining, airport operations, natural gas, food processing and infrastructure.
The SEBI is the regulatory body for securities and commodity market in India under the ownership of Ministry of Finance within the Government of India.
