Hindenburg trashes Sebi show-cause notice as 'nonsense' and 'concocted'

US-based Hindenburg Research came into the limelight in January 2023 after it released a scathing report on Adani Group

American short-seller Hindenburg Research called the Sebi show-cause notice on its 2023 report against Adani Group 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.

It attacked the Indian market regulator for not naming Kotak Bank which, according to Hindenburg, “created and oversaw the offshore fund structure used by our investor partner to bet against Adani”.

Read: Kotak Bank created and oversaw fund that Hindenburg investor used to short Adani stocks, says research firm

According to Hindenburg, the show-cause notice, which was emailed on June 27, did not take into account the content of its 106-page report but only the technical elements related to its disclaimer.

Sebi, Adani Group and Kotak Bank did not immediately respond to the email queries sent by Moneycontrol.

“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.

Also Read: Review filed against SC’s judgment on Adani-Hindenburg issue

It further alleged that the Indian capital markets watchdog pressured brokers behind-the-scenes to close short positions in Adani under the threat of expensive, perpetual investigations, effectively creating buying pressure and setting a ‘floor’ for Adani’s stocks at a critical time.