US-based short seller Hindenburg Research said that it has received a show cause notice from the Securities and Exchange Board of India (SEBI) on June 27, outlining suspected violations of Indian regulations. The short seller trashed the show cause notice called it ‘nonsense’.
In a blog post released released by Hindenburg Research, it said, “Today we are sharing the entirety of this notice, frankly because we think 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.”
Hindenburg Research alleged that SEBI came to Adani Group’s aid after the January 2023 report was released. “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,” Hindenburg said.
“Following our report, we were told that SEBI pressured brokers behind-the-scenes to close short positions in Adani under the threat of expensive, perpetual investigations, effectively creating buying pressure and setting a ‘floor’ for Adani’s stocks at a critical time,” it added.
Hindenburg Research stated that when it asked the Supreme Court to investigate the charges last year, it seemed to agree with “several key findings of our report”. However, later, it added, Sebi claimed to be unable to investigate further.
It is worth noting that in late June 2024, Adani CFO Jugeshinder Singh said that some regulator notices aimed toward the group as ‘trivial’, apparently writing off the prospect of their severity even before the process was concluded.
“This confidence may be derived in part through Adani’s relationship with SEBI. Gautam Adani met the SEBI Chairperson Madhabi Buch twice in 2022, becoming “the first high profile businessman” to do so, per The Hindu Business Line,” the US short seller said.
On the back of these, Hindenburg Research said that it is in process of filing an RTI seeking the names 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. “We will await SEBI’s response on whether it will provide basic transparency on its investigations,” it added.
Hindenburg Research had, in January 2023, released a report on Adani Group that triggered a $150 billion rout in Adani stocks. Sebi had been probing the Adani group, on Hindenburg Research’s claims of improper use of tax havens and stock manipulation by the group. The Supreme Court in January this year had said that the Adani Group did not need to face more investigations beyond the current scrutiny of the market regulator.