SEBI issues notice to Hindenburg 2 months ahead of Adani report

Business: Market regulator Securities and Exchange Board of India (SEBI) in its 46-page show cause notice to Hindenburg Research has detailed how the US short-seller shared an advance copy of its critical report on the Adani Group with New York-based hedge fund manager Mark Kingdon two months before its public release.The show cause notice alleges that Hindenburg, Kingdon’s hedge fund and a broker linked to Kotak Mahindra Bank benefited from a more than $150 billion drop in the market value of 10 listed Adani Group firms following the publication of the report.The market regulator has also accused Hindenburg of making “unfair” gains through collusion by using non-public and misleading information to induce panic selling in Adani Group stocks. Last week, senior advocate Mahesh Jethmalani alleged that a businessman with Chinese links had commissioned Hindenburg Research to produce the report, which led to a drop in shares of Adani Group companies. In a post on social media platform X, Jethmalani claimed that Kingdon, the US businessman behind Kingdon Capital Management LLC, had hired Hindenburg to prepare a report on the Adani Group. SEBI has issued show-cause notices to Hindenburg Research, Nathan Anderson and entities of Mauritius-based foreign portfolio investor (FPI) Kingdon for trading violations in shares of Adani Enterprises Ltd, which led to the Hindenburg report and the case that followed. Investigations by the market regulator also revealed that Kotak Mahindra and Hindenburg had conspired together to take short positions in Adani shares. Kotak Mahindra (International) Ltd, a unit of Kotak Mahindra Bank, has said Hindenburg was never a client of the group’s K-India Opportunities Fund (KIOF) and Kotak Mahindra International Ltd (KMIL).