SEBI Issues Show-Cause Notice To Hindenburg Research, Anderson, & FPIs Over Adani Trading Violations

In a significant move, the Securities and Exchange Board of India (SEBI) has issued a show-cause notice to Hindenburg Research, Nathan Anderson, and the Mauritius-based foreign portfolio investor (FPI) entities linked to Mark Kingdon.

The notice pertains to alleged trading violations involving the scrip of Adani Enterprises Ltd, both preceding and following the release of the Hindenburg report.

The 46-page notice from SEBI accuses Hindenburg and Anderson of breaching several regulations under the SEBI Act, including the SEBI’s Prevention of Fraudulent and Unfair Trade Practices regulations and the Code of Conduct for Research Analyst regulations.

Specifically, SEBI alleges that Hindenburg and Anderson’s actions were in violation of established market conduct norms.

Additionally, SEBI accuses FPI Kingdon of contravening the SEBI Act, SEBI’s Prevention of Fraudulent and Unfair Trade Practices regulations, and SEBI’s Code of Conduct for Foreign Portfolio Investors.

The show-cause notice outlines these allegations in detail.

SEBI claims Hindenburg and FPIs were misled by saying their report was for valuing securities outside India.

SEBI contends that the report was clearly relevant to listed entities in India, thereby misleading the market and investors.

Furthermore, the regulator alleges that Kingdon facilitated Hindenburg’s indirect participation in Adani Enterprises by collaborating with the short seller to trade in the company’s futures in the Indian derivatives market.

SEBI claims that Kingdon and Hindenburg shared the profits from these transactions, adding another layer to the alleged violations.

Hindenburg Research, however, stands by its report released in January 2023, maintaining its stance and defending the findings presented at that time.

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