 "Sebi vs Hindenburg: The fight has moved away from Adani, the initial target")
Hindenburg Research's initial target -- the ports-to-airports conglomerate Adani group -- has moved out of the ring with the US-based short-seller now trading punches at Madhabi Puri Buch, the boss of market regulator Securities and Exchange Board of India (Sebi).
In its new report released on Saturday, the Nathan Anderson-led firm -- citing whistleblower documents -- has highlighted that Sebi’s chairperson previously held investments in offshore funds that were also used by Adani Group.
“We suspect Sebi’s unwillingness to take meaningful action against suspect offshore shareholders in the Adani Group may stem from Chairperson Madhabi Buch’s complicity in using the exact same funds used by Vinod Adani, brother of Gautam Adani,” Hindenburg Research has alleged.
In a statement, the Sebi chief has “strongly” denied the allegation terming it “baseless insinuations” which is “devoid of any truth.” This is not the first time Sebi and Hindenburg have hurled accusations at each other.
On June 26, Sebi had slapped show cause notices (SCNs) on Hindenburg Research, its founder Nathan Anderson, and four others. In the notice, the regulator had alleged Hindenburg had made misleading disclosure as a scheme to profit from short-selling.
In the SCN, the market regulator said it has also observed that the Hindenburg report contained certain misrepresentations and inaccurate statements.
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“The misrepresentations built a convenient narrative through selective disclosures, reckless statements and catchy headlines, in order to mislead readers of the report and cause panic in Adani Group stocks, thereby deflating prices to the maximum extent possible and profit from the same,” it has said.
Sebi has also alleged that Hindenburg violated regulations by providing research on Adani group companies listed in India without registering under the Research Analysts (RA) Regulations.
“The report comprised written or electronic communication including research analysis or opinion concerning securities listed in India and was a “research report” governed by the RA regulations. However, Hindenburg did not enter into an agreement with a research analyst (RA) or research entity (RE) registered under the RA Regulations as required by Regulation 4 of the RA Regulation,” Sebi has alleged in the SCN.
The domestic securities regulator had given 21 days to submit responses. It is unclear if Hindenburg has responded to the notices.
In its latest report, Hindenburg has fired back, questioning Sebi's objectivity in the Adani matter due to Buch's alleged conflict of interest.
Meanwhile, the Sebi chief believes that the new post is nothing but an attempt to malign her image. “It is unfortunate that Hindenburg Research against whom Sebi has taken an enforcement action and issued a show cause notice has chosen to attempt character assassination in response to the same,” Buch has said, while assuring a more “detailed statement in due course.”