Hindenburg Received Show Cause Notice From SEBI, Says Received “Bizarre Email”
The US-based short seller Hindenburg Research said on Monday that it had received a “show cause” notice from the Securities and Exchange Board of India (SEBI) on June 27. The letter outlined a suspected violation of Indian regulations and alleged that after the January 2023 report was released, the regulator came to Adani Group’s aid.
It said that it is “nonsense, 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”.
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Hindenburg, also stated that Kotak Bank, an Indian firm has created and oversaw an offshore fund structure that was used by its “investor partner” to bet against the conglomerate, providing new details of trades that have puzzled the investors.
It has said without naming the investor, Hindenburg has made $4.1 million in gross revenue through “gains related to Adani shorts from that investor relationship” and just $31,000 through its short position of Adani’s US bonds.
“Our understanding from discussions with sources in the Indian market is that Sebi’s surreptitious aid of Adani commenced almost immediately post-publication of our January 2023 report,” it said in a blog post on Tuesday.
The company has said that after the Supreme Court asked the regulator to investigate the charges last year, it seems to agree with “several key findings of our report”.
It also added that last month, Adani Group’s Chief Financial Officer Jugeshinder Singh said that some regulator notices aimed towards the group were “trivial”.
The Hindenburg Research has said that it would file a right-to-information application “seeking the name of Sebi employees that worked on both the Adani matter and the Hindenburg matter, along with basic details on meetings and calls between Sebi and Adani and its various representatives.”
In the 46-page notice which was attached to the post, Sebi alleged that the report which was released in January last year contained certain misrepresentations or inaccurate statements which might mislead the readers.
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The Sebi notice adds a twist to the saga unleashed last year when Hindenburg alleged improper business dealing by Adani.
The Hindenburg response shed new light on the mechanics of its trade the details of which had intrigued other investors because the Indian securities rule made it hard for foreigners to bet against companies there.
