It was also mentioned that Jugeshinder Singh, the chief financial officer of Adani Group, claimed last month that certain regulatory notices sent to the company were “trivial” |
The Securities and Exchange Board of India (Sebi), according to US-based short seller Hindenburg Research, sent it a “show cause” notice on June 27 “outlining suspected violations of Indian regulations.” The company further claimed that Sebi intervened on behalf of Adani Group following the release of the January 2023 report.
“Our understanding from discussions with sources in the Indian market is that Sebi’s surreptitious aid of Adani commenced almost immediately post-publication of our January 2023 report,” it wrote on a blog on Tuesday.
“Following our report, we were told that Sebi 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.”
The business claimed that it appeared to concur with “several key findings of our report” following the Supreme Court’s request last year for the regulator to look into the allegations.
“Later, Sebi claimed to be unable to investigate further,” it continued.
It was also mentioned that Jugeshinder Singh, the Chief Financial Officer of Adani Group, stated last month that several regulatory notices sent to the company were “trivial”.
“Adani’s relationship with Sebi may have contributed to this confidence,” the statement read, mentioning that Gautam Adani had two meetings with Sebi Chairperson Madhabi Puri Buch in 2022.
A right to information (RTI) application, according to Hindenburg Research, would be submitted “seeking the names of Sebi employees that worked on both the Adani matter and the Hindenburg matter, along with basic details on meetings and calls between Sebi and Adani and its various representatives.”
“We will await Sebi’s response on whether it will provide basic transparency on its investigations,” added the statement.
Sebi claimed that the report published in January of last year “contained certain misrepresentations/inaccurate statements” intended to “mislead readers” in the 46-page notice that Hindenburg attached to the article.
“In our view, Sebi has neglected its responsibility, seemingly doing more to protect those perpetrating fraud than to protect the investors being victimised by it,” Hindenburg stated.
Additionally, it stated that their Adani “thesis” had one investor partner.
“We have made $4.1 million in gross revenue through gains related to Adani shorts from that investor relationship,” claimed the statement. “We made just $31,000 through our own short of Adani US bonds held into the report.”
“Net of legal and research expenses (including time, salaries/compensation, and costs for a two-year global investigation) we may come out ahead of break even on our Adani short,” the post said.
“There was never a point where the Adani thesis was financially justifiable for us,” the statement continued.
“But, to date, our research on Adani is by far the work we are most proud of,” added the statement.
The short seller claimed that Indian investors have received a “loud” message as a result of the inquiry.
“You’re not really protected against fraud. For businesses who can purchase influence, corporate governance in India is a fantasy,” the statement stated.
Sebi began looking into the Adani group, which is headed by billionaire Gautam Adani, in January 2023 after Hindenburg Research claimed that the group was manipulating stocks and using tax havens improperly.
In January of this year, the Supreme Court ruled that the Adani Group did not require any further inquiries beyond the market regulator’s ongoing examination.