SEBI Issues Show-Cause Notice Over Adani Report Leak And Market Manipulation Allegations

In a 46-page show-cause notice, the Securities and Exchange Board of India (SEBI) detailed how US short-seller Hindenburg Research shared an advance copy of its critical report on the Adani Group with New York-based hedge fund manager Mark Kingdon two months before its public release.

The notice alleged that Hindenburg, Kingdon’s hedge fund, and a broker associated with Kotak Mahindra Bank benefited from the over $150 billion decline in the market value of Adani Group’s 10 listed firms following the report’s publication.

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SEBI also accused Hindenburg of making “unfair” profits through collusion, using non-public and misleading information to induce panic selling in Adani Group stocks.

Last week, senior lawyer Mahesh Jethmalani alleged that a businessman with Chinese links had commissioned the Hindenburg Research report, which led to a decline in Adani Group company shares.

In a post on social media platform X, Jethmalani claimed that Kingdon, the American businessman behind Kingdon Capital Management LLC, had hired Hindenburg to prepare the report on the Adani Group.

SEBI issued a show-cause notice to Hindenburg Research, Nathan Anderson, and the entities of Mauritius-based foreign portfolio investor (FPI) Kingdon for trading violations in Adani Enterprises Ltd, leading up to and following the Hindenburg report.

An investigation by SEBI also revealed that Kotak Mahindra and Hindenburg conspired to take short positions in Adani shares.

Kotak Mahindra (International) Ltd, a unit of Kotak Mahindra Bank, stated that Hindenburg was never a client of the group’s K-India Opportunities Fund (KIOF) and Kotak Mahindra International Ltd (KMIL).