New Delhi: India’s markets regulator SEBI has slapped Hindenburg Research with a show cause notice for alleged “unfair trade practices” in its 2023 broadside against the Adani Group – a move that the US firm termed as ‘nonsense’ and an attempt to ‘silence and intimidate’ those exposing corruption.
The Securities and Exchange Board of India (SEBI) in the June 26 show cause notice charged Hindenburg of “deliberately sensationalising and distorting certain facts” in the damning January 2023 report on the Adani group as well as working with a New York hedge fund to make its bet.
Hindenburg, which published the notice on its website, said it made just USD 4.1 million from its declared positions on Adani stocks and criticised the regulator for not focusing its investigation into the January
2023 report “providing evidence” of the conglomerate creating “a vast network of offshore shell entities” and moving billions of dollars “surreptitiously” into and out of Adani public and private entities.
It said while SEBI was seeking to claim jurisdiction over a US-based investor, the regulator’s notice “conspicuously failed to name the party that has an actual tie to India: Kotak Bank,” which created and oversaw the offshore fund structure used by Hindenburg’s investor partner to bet against Adani. The regulator “masked the “Kotak” name with the acronym “KMIL”,” it added. KMIL refers to Kotak Mahindra Investments Ltd, the asset management company. While KMIL stated that Hindenburg was “never” its client, SEBI’s show cause notice said that Hindenburg’s client Kingdon Capital Management had invested in KMIL’s K-India Opportunities Fund, which created positions in Adani Enterprises Ltd prior to the report release and “a total profit of Rs 183.24 crore” thereafter.
Hindenburg had shared its report with Kingdon Capital prior to the release, that led to a rout in Adani group stock, wiping out over USD 150 billion in market value of the 10 listed entities at their lowest point.