Adani Group in Spotlight Again as Hindenburg Receives Show Cause Notice By SEBI

Adani Group is once again dominating headlines as US short-seller Hindenburg Research said that it has received a show cause notice from the market watchdog SEBI regarding alleged violations related to its bets on the conglomerate's stocks.

Hindenburg has dismissed SEBI's notice around its 2023 report and has called it 'nonsensical' and 'concocted.'

“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 said in a post on its website," the report said.

The short-selling firm stated that much of the market regulator's notice appeared to state that their legally disclosed investment stance was secretive or insidious. The notice seemed to present "novel legal arguments" claiming jurisdiction over the US-based firm, which has no entities, employees, consultants or any other type of presence in India.

At 10:35 am, the flagship company of the Adani conglomerate was trading at Rs 3,167, down by 0.52 per cent on the National Stock Exchange. All Adani stocks took a volatile turn after witnessing minor lows.

“One might think that a securities regulator would be interested in meaningfully pursuing the parties that ran a secret offshore shell empire engaging in billions of dollars of undisclosed related party transactions through public companies while propping up its stocks through undisclosed share ownership via a network of sham investment entities. Instead, Sebi seems more interested in pursuing those who expose such practices,” said the US short-seller.

The Kotak Angle

Hindenburg claimed that SEBI tried to assert jurisdiction over them but failed to mention about Kotak Bank. The private banking and brokerage firm managed the offshore fund structure for its investor partner betting against Adani.

Instead it simply named the K-India Opportunities fund and masked the “Kotak” name with the acronym “KMIL,” Hindenburg stated.

"We suspect SEBI’s lack of mention of Kotak or any other Kotak board member may be meant to protect yet another powerful Indian businessman from the prospect of scrutiny, a role SEBI seems to embrace," the short-selling firm added.