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[Introduction] Hindenburg, an American short-selling agency, released a report that directly targeted the Chairman of the Securities and Exchange Commission of India and the Adani Group.

China Fund News reporter Anman

Just last weekend, US short-selling agency Hindenburg Research released a new report that directly targeted the Securities and Exchange Board of India (SEBI) and the Adani Group.

On August 12, share prices of companies under India's Adani Group fell sharply at the opening, with Adani Enterprises' decline reaching as high as 5.3% at one point.

Adani Gas plunged nearly 14% at one point.

Hindenburg latest news

Directly targeting the Chairman of the Securities and Exchange Commission of India

According to whistleblower documents cited by Hindenburg, Securities and Exchange Board of India chairperson Madhabi Puri Buch and her husband hold shares in an offshore fund that was heavily funded by partners of Vinod Adani, the brother of Adani Group chairman Gautam Adani.

Hindenburg also pointed out that Buch had set up two consulting companies before joining SEBI, one in Singapore and one in India. During the years when Buch worked full-time at SEBI, she held 100% of the shares of the Singapore company and 99% of the shares of the Indian company until she was appointed as the chairman of SEBI, when she transferred the shares to her husband.

Hindenburg said the whistleblower had alleged in the documents that Buch had used her personal email to trade on behalf of her husband while working at SEBI. Although she ostensibly gave up control of the consulting firm, there was evidence that she had redeemed shares in the fund in her husband's name.

Hindenburg stressed that Buch's actions made him worried about the opacity of the Indian market. But a mutual fund lobbying agency refuted on Sunday that Hindenburg was trying to link random events in the past to create sensational news, and that the Indian financial system was safe and transparent and had no major flaws.

The parties responded

In a statement on Sunday, SEBI asked investors to remain calm and said it would conduct due diligence on Hindenburg's report. The agency also pointed out that it had conducted appropriate investigations into Hindenburg's allegations of market manipulation against Adani Group, and 23 of the 24 investigations had been completed in March this year, with the last one about to be completed.

It also responded that Buch made relevant disclosures regarding securities holdings and transfers, and also avoided matters involving potential conflicts of interest.

Buch herself also stated that she had dealt with the offshore fund shares related to the Adani Group two years before she became the chairman of SEBI. The two consulting companies were dormant immediately after she joined SEBI and were used for her consulting business only after her husband retired in 2019.

In addition, Adani Group issued a statement in the exchange that Hindenburg Research's latest allegations are a malicious and manipulative selection of publicly available information. Adani Group has "absolutely no business relationship" with the individuals or matters mentioned in Hindenburg Research's latest report.

Adani Group said, “We remain firmly committed to transparency and compliance with all legal and regulatory requirements. We completely reject the allegations against Adani Group, which are a re-creation of false allegations, which were thoroughly investigated by the Supreme Court in March 2023, proved to be baseless and refuted. We reiterate that our overseas holding structure is fully transparent and all relevant details are regularly disclosed in a large number of public documents.”

Last year's precise short selling

"Asia's richest man" changes

It is worth noting that in January 2023, Hindenburg Research accused Adani Group of stock price manipulation and accounting fraud, which once caused the Adani Group's market value to evaporate by more than $150 billion. Adani also lost the title of "Asia's richest man". His rival, Mukesh Ambani, chairman of India's Reliance Industries, became Asia's new richest man.

Hindenburg then said on July 1 that after publishing the short report, he only earned about $4.1 million from shorting Adani shares through clients, and made about $31,000 by directly shorting Adani's US bonds. After deducting legal and research fees, Hindenburg Research may break even on shorting Adani.

Adani Group's share price has recovered most of its losses so far.

Editor: Xiaomo

Reviewer: Chen Siyang

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