The Securities and Exchange Board of India (SEBI) has slapped American investor research company Hindenburg Research with a show cause notice for trading in stocks of Adani Enterprises Ltd, right before and after the release of its report on the Gautam Adani-led group in January 2023.
Responding to SEBI's 46-page notice, Hindenburg termed it "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".
It also claimed that “SEBI’s surreptitious aid of Adani commenced almost immediately” soon after the publication of the January 2023 report.
Last year, the US-based short-sellers report on the Gautam Adani-led Group triggered a rout in the group's stocks as it alleged the Adani Group of stock manipulation and accounting fraud. The report was released just before the launch of Adani Enterprises Ltd’s (AEL) Rs 20,000 crore follow-on public offer (FPO), which was later called off.
In its response, Hindenburg has also named Kotak Bank alleging that SEBI conspicuously failed to name the party that has an actual tie to India: Kotak Bank, one of India’s largest banks and brokerage firms founded by Uday Kotak.
“While SEBI seemingly tied itself in knots to claim jurisdiction over us, its notice conspicuously failed to name the party that has an actual tie to India: Kotak Bank, one of India’s largest banks and brokerage firms founded by Uday Kotak, which created and oversaw the offshore fund structure used by our investor partner to bet against Adani. Instead, it simply named the K-India Opportunities fund and masked the “Kotak” name with the acronym “KMIL”,” Hindenburg said.
"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 US-based short seller argued.
It further alleged that SEBI was targeting those who expose nefarious practices, such as running a secret offshore shell empire, engaging in billions of dollars of undisclosed related party transactions through public companies, and artificially inflating stock prices through undisclosed share ownership via a network of fraudulent investment entities.
“SEBI seems more interested in pursuing those who expose such practices. This stance is broadly in line with the actions of other elements of the Indian government which have sought to arrest 4 journalists for writing critical articles about Adani and expelled members of parliament who were critical of Adani,” Hindenburg added.
.jpg&w=3840&q=75)
