“Short selling” should be made an offence and US short selling firm Hindenburg Research’s founder Nathan Anderson and his associates should be prosecuted, said a petition in the Supreme Court after Hindenburg damning report about Indian billionaire Gautam Adani and his group.
The petition, filed by advocate ML Sharma, sought investigation against Nathan Anderson and his associates in the US and India for allegedly exploiting innocent investors and the "artificial crashing" of the Adani Group's stock value in the market.
In its report, Hindenburg Research accused the Adani Group of being involved in accounting fraud and "brazen stock manipulation". The company has refuted the allegations.
Hindenburg engages in activist short selling, which involves selling borrowed stocks with the hope of buying the same at a lower price later. If the prices fall on the expected lines, the short sellers make a killing.
The petitioner has requested the top court’s directions for a First Information Report (FIR) to be registered, of the short sellers' turnover, their prosecution to protect the citizens of India and further action against them for "duping the Indian share market and innocent investors for their vested interest to provide complete justice".
ML Sharma’s petition has been registered and numbered by the Supreme Court registry, he told news agency PTI.
Since the release of the Hindenburg report on January 24, Gautam Adani's conglomerate has erased around $117 billion market cap, one of the worst in history. This is almost half of the Group's combined market value.
Amid the controversy, the share price of Adani Enterprises took a fresh knock on February 3, plunging 35 per cent in the morning trade, a day after it was placed under National Stock Exchange's Additional Surveillance Measure framework.
(With inputs from PTI)