Hindenburg Research attacks market regulator SEBI, reveals it made small gain with last year's Adani short-selling event

Securities and Exchange Board of India, or SEBI, “seems more interested in pursuing those who expose such practices” while its probe into billionaire Gautam Adani’s empire has hit a wall, the US short-seller said in a statement on its website Monday.

In June, SEBI issued a notice stating that Hindenburg’s scathing January 2023 report on the Adani Group contained certain misrepresentations and inaccurate statements intended to mislead readers.

The report generated nearly $4.1 million in gross revenue from Adani shorts through an unnamed investor relationship and around $31,000 from Hindenburg’s own short of Adani U.S. bonds, according to a July 1 statement from Hindenburg.

Last year, Hindenburg accused the ports-to-power conglomerate of extensive corporate misconduct, calling it "the largest con in corporate history." Despite the Adani Group's consistent denials, the following stock market crash wiped out over $150 billion in market value from its listed companies. However, the Adani Group has since recovered most of these losses.

Hindenburg claimed that SEBI’s notice “conspicuously failed to name the party that has an actual tie to India: Kotak Bank,” which oversaw the offshore fund structure used by Hindenburg’s investor partner to short Adani.

The regulator allegedly concealed the name "Kotak" using the acronym "KMIL," which stands for Kotak Mahindra Investments Ltd., the asset management company, it said.

“Sebi has neglected its responsibility, seemingly doing more to protect those perpetrating fraud than to protect the investors being victimized by it,” Hindenburg said in the statement.

After Hindenburg’s Adani report, the Supreme Court ordered SEBI to investigate accusations while forming an expert panel to look into regulatory gaps.

In January this year, the top court directed SEBI to conclude its investigation within three months and stated that no further probes were necessary.

Hindenburg’s latest attack comes as India’s newly rejuvenated opposition parties have been criticising Prime Minister Narendra Modi for crony capitalism, accusing him of favouring billionaires like Adani and Mukesh Ambani over ordinary citizens during a heated parliamentary standoff this week.