Kotak Mahindra Bank issues clarification on public statements made by Hindenburg

"We deny any allegation of being aware of such report or acting in collusion in any manner with Kingdon or Hindenburg," it added.

Earlier today, Kotak Mahindra group said Hindenburg Research was never a client of Kotak group's K- India Opportunities Fund (KIOF) and Kotak Mahindra International Ltd (KMIL) and that the fund was unaware of the US short seller being a partner of any of its investors.

Hindenburg had said that Kotak Mahindra Bank and brokerage firms founded by Uday Kotak, created and oversaw the offshore fund structure used by the investor partner of Hindenburg to short Adani stocks.

The US-based short-seller questioned why Sebi failed to name Kotak bank in its observations.

“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 name 'Kotak' name with the acronym 'KMIL',” Hindenburg said in an update.

Hindenburg alleged that Sebi’s omission of Kotak’s name may be meant to protect the businessman from scrutiny.

"Uday Kotak, founder of the bank, personally led SEBI’s 2017 Committee on Corporate Governance. 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," Hindenburg said.

Sebi show cause notice to Hindenburg

Hindenburg Research received a show cause notice from market regulator SEBI regarding its Adani Report, the firm said in a blog post on July 2.

The 46-page show cause notice was delivered on June 27, Hindenburg said. The blog post said that the firm was short on Adani shares 'through a deal with an investor partner who was indirectly short Adani derivatives through a non-Indian, offshore fund structure'.

The post revealing Sebi notice reiterates its position that Hindenburg had adequately disclosed that it was short on Adani shares, 'so readers could weigh the potential for bias given that we stood to benefit from a decline in Adani shares.'

Hindenburg allegations

On January 24, 2023, Hindenburg Research published a report accusing Adani group companies of stock manipulation and accounting fraud, ahead of a proposed Rs 20,000 crore share sale by Adani Enterprises. The conglomerate termed the report as malicious and baseless.

Meanwhile, India's Supreme Court ruled in January that the Adani Group won't face any further investigations beyond Sebi's current scrutiny, offering relief to the conglomerate. Sebi has been probing the Adani group for tax haven use and stock manipulation. The verdict suggested no heightened regulatory risk for Adani. The court also decided against altering disclosure rules for offshore funds, despite Hindenburg's claims.