Hindenburg Aims for Profit: Adani Calls Report Unfortunate, SEBI Denies Allegations
The American short-selling firm Hindenburg published a serious report against Indian billionaire Gautam Adani last year, and this year, it has also targeted the market regulator SEBI by including Adani. In its new report, Hindenburg has alleged that documents obtained from a whistleblower indicate that SEBI Chairman Madhavi Buch was involved in an offshore entity used in Adani’s money siphoning scam. Adani Group has also issued a statement, completely dismissing the claims made in the Hindenburg report.
Buch Couple Denies Allegations
The Buch couple issued a statement late Saturday night rejecting the allegations. Citing PTI, they said, “We completely deny the baseless claims made in this report. There is no truth to it. Our lives and our financial matters are like an open book. Over the years, we have provided SEBI with all the necessary information.”
Adani Group Refutes All Allegations
In response to Hindenburg Research’s new report, Adani Group has issued a statement. It mentions that the allegations in the report are presented by distorting facts. “We completely deny all the allegations made against the group by Hindenburg. It is merely recycling defamatory claims. All the previous allegations have been thoroughly investigated and proven baseless, and were dismissed by the Supreme Court in January 2024.”
Adani Group Reiterates Transparency
In its statement regarding the Hindenburg report, Adani Group reiterated, “Our foreign holding structure is completely transparent, with all facts and details regularly presented in public documents. There are no professional connections with the mentioned individuals or matters in this deliberate attempt to malign the Adani Group.
Hindenburg Claims No Truth in Allegations
Hindenburg’s report released on Saturday claims that whistleblower documents show that Madhavi Buch and her husband Dhaval Buch opened an account with IPE Plus Fund 1 in Singapore on June 5, 2015. The couple’s total investment is estimated to be $10 million. Hindenburg has accused that an offshore Mauritius fund was established by an Adani Group director through India Infoline and is registered in the tax haven Mauritius.
SEBI Chairperson and Husband Reject Allegations
Rejecting the allegations made in the Hindenburg report, SEBI Chairperson Madhavi Puri Buch and her husband Dhaval Buch stated early Sunday morning that the accusations in the Hindenburg report dated August 10 are baseless and contain no truth. “Our lives and finances are like an open book. All necessary disclosures were made to SEBI last year.
Claims of SEBI’s Response to Allegations
Madhavi Puri Buch further stated that they will not hesitate to disclose any financial documents, including those related to the period when they were completely ordinary citizens. They are prepared to provide these if required by the authorities. It is unfortunate that while SEBI has acted against Hindenburg Research, it seems to have attempted to tarnish our reputation in its response.
Hindenburg Predicts Major Developments in India
Before releasing the report, Hindenburg Research hinted that something significant was about to happen in India. A year ago, Hindenburg Research had accused the Adani Group of money laundering and stock manipulation, and posted on social media platforms indicating new revelations, though it did not name any companies.
Accusations of Money Laundering and Stock Manipulation
On January 24, 2023, Hindenburg Research released a report related to the Adani Group, leading to a significant drop in the group’s stock prices, though recovery followed later. SEBI sent a 46-page notice to Hindenburg, referring to the report’s claims. On July 1, 2024, a blog post by Hindenburg Research claimed that the notice indicated rule violations and false statements intended to mislead readers, with SEBI accused of covering up evidence.
Hindenburg Accuses SEBI of Protecting Wrongdoers
Hindenburg stated, “In our view, SEBI has neglected its responsibilities and appears to be more focused on protecting wrongdoers than safeguarding investors.” Hindenburg added, “Our understanding from discussions with Indian market sources is that SEBI’s undisclosed support for Adani began shortly after our January 2023 report. We were told that SEBI pressured brokers to close short positions in Adani stocks, creating buying pressure and assisting Adani Group stocks at a crucial time.”
SEBI’s Notice Includes Four Major Points
Before and immediately after the release of the Hindenburg report, a show-cause notice was issued regarding trading activities of certain entities related to Adani Enterprises. There was a concentration of short-selling activity in Adani Enterprises’ derivatives before the report was published. After the report’s release, Adani Enterprises’ stock price fell by around 59% from January 24, 2023, to February 22, 2023. SEBI’s notice also mentioned the changes in stock prices during this period.
Short Selling Explained
Short selling involves selling stocks that the trader does not own at the time of trade. Later, these stocks are purchased to close the position. Before short selling, arrangements to borrow or lease the shares are necessary. Simply put, just as you buy stocks first and then sell them, in short selling, stocks are sold first and then bought. The difference between the selling and buying prices constitutes the profit or loss.
