After releasing its research report on billionaire Gautam Adani at the beginning of last year, American short seller firm Hindenburg has now targeted Madhabi Puri Buch, the chairperson of India’s market regulator SEBI. And this is also related to the Adani case.
In the report released on Saturday, Hindenburg has claimed that the SEBI chairman and her husband Dhawal Buch had stakes in two offshore funds used in Gautam Adani’s ‘money misappropriation’. But do you know what this offshore fund is and how it works? Let us understand the special aspects related to this matter in 10 points…
First- What is an offshore fund?
According to the Hindenburg report, SEBI chairperson Madhabi Puri Buch and her husband had stakes in Bermuda and Mauritius offshore funds, which were used on behalf of Adani Group. Offshore funds are also called international funds. In fact, it is similar to a mutual fund scheme that invests in the foreign market, which invests in any special sector or companies or regular income securities.
Also read: ‘Malicious, vicious and manipulative…’, Adani Group’s reaction to Hindenburg’s revelations, said it was an attempt to earn profits.
Second- Meaning of offshore banking
Offshore Banking is banking that happens outside your country. Offshore bank account makes it easier to trade in foreign currencies. It also allows you to take advantage of any financial security or tax benefits offered by another country. Let us tell you here that offshore banking is mostly used in those businesses which operate internationally.
Third- How do offshore funds work?
These offshore funds invest money in the international market as representatives of investors. They either invest directly in shares of foreign companies or invest in other foreign mutual funds. Investment by a fund in other funds is called feeder route. Investing in foreign shares is riskier than investing in domestic shares. Your returns are also affected by how much your country’s currency strengthens or weakens against a foreign currency.
Fourth- What is money siphoning?
If Adani Money Siphoning Scandal is mentioned in the Hindenburg report, it is called misappropriation of money. Actually, if we understand money siphoning in detail, then if the loan taken from different banks or financial institution is used by the concerned company for some purpose about which the lender is not aware and this causes harm to its financial condition, then it is considered as money siphoning. Money is kept in siphoning category.
Fifth- What is a tax haven?
Tax haven countries are those countries where taxes are much lower than other countries or are tax free. These are such countries which provide the facility to foreign citizens, investors and businessmen that they will not have to pay tax or very little tax on the investment they make while staying in that country. Especially these tax haven countries are heaven for those people who evade taxes and deposit money in these countries. Bermuda and Mauritius, which have been mentioned in the Hindenburg report, are also included in the tax haven countries. Apart from this, many countries like Cyprus and Panama come under it.
Also read: How is the Hindenburg Report prepared? After Adani, now SEBI Chief is its target… Know the story of its owner Nathan Anderson
Sixth- What is Hindenburg?
Hindenburg is a short seller firm run by Nathan Anderson, a graduate in international business from the University of Connecticut, America. It was established in the year 2017. It was named after the Hindenburg airship accident that occurred on May 6, 1937 in Manchester Township, New Jersey. The work of the company is to do research on share market, equity, credit and derivatives. Through this research, the company finds out whether there is any wrongful misappropriation of money in the stock market and issues a research report regarding it.
Seventh- What is a short seller firm?
Hindenburg Company is not only an investment firm but also a short seller company. She earns big money as an activist short seller. Actually, short selling is a type of trading or investment strategy. In this, someone buys stocks or securities at a particular price and then sells them when the price is higher, thereby making huge profits.
Eighth- What are shell companies?
Shell companies are firms which run only on paper. They do not have any official business. Generally these companies are used only for money laundering. In other words, these companies are a means to convert black money into white. There is a system to save tax in these companies. In this, the entire money is shown as expense, due to which tax is not levied. This is also considered an easy method of money laundering.
Also read: Opposition attacks Center on Hindenburg’s new report, demands JPC inquiry
Ninth- How and what does SEBI work?
Securities and Exchange Board of India i.e. SEBI was established in the year 1992 as a market regulator. Its job is to protect the interests of investors as well as to provide them proper guidance. It is also responsible for preventing manipulation and fraud related to business in the capital market.
Tenth- Who appoints the SEBI Chairperson?
The Chairman of SEBI is appointed by the Central Government. Currently, Madhabi Puri Buch is the Chairperson of the Securities and Exchange Board of India (SEBI) and is the first woman chairperson of the market regulator. He was appointed president in March 2022. Currently Butch and her husband are the targets of Hindenburg and have been accused by a short seller firm of links to Indian billionaire Gautam Adani.