SEBI Responds To Hindenburg Report: Key Takeaways from The Official Statement

The Securities and Exchange Board of India (SEBI) has issued a two-page statement addressing the allegations made in a report by US financial research firm Hindenburg Research.

In the statement, SEBI acknowledged the report, which was published on August 10, 2024, and advised investors to remain calm and exercise due diligence before reacting to such reports. SEBI emphasized that the report includes a disclaimer, noting that Hindenburg Research might hold short positions in the securities discussed.

Regarding the report’s claims, SEBI clarified, “Hindenburg Research alleges that SEBI has not taken any action against the Adani Group. This overlooks the fact that SEBI issued a ‘show cause’ notice to Hindenburg Research on June 27, 2024. Additionally, the report suggests that SEBI made amendments to the SEBI (REIT) Regulations 2014 to benefit a diversified multinational financial group. These issues require a clear response.”

SEBI further highlighted that the allegations against the Adani Group had been thoroughly investigated. According to SEBI, the Hon’ble Supreme Court, in its order dated January 3, 2024, acknowledged that SEBI had completed 22 out of 24 investigations into the Adani Group. Another investigation was completed in March 2024, and the final investigation is nearing completion. During this process, SEBI issued over 100 summonses, sent approximately 1,100 letters and emails requesting information, and engaged in over 100 communications with domestic and foreign regulators and external agencies. Over 300 documents, comprising about 12,000 pages, have been reviewed.

SEBI also explained that after completing an investigation, it initiates enforcement proceedings, which are quasi-judicial in nature. This includes issuing a show cause notice, allowing the involved parties an opportunity to be heard, and ultimately issuing a speaking order. The order is then made public. SEBI stated that where investigations have been concluded, enforcement proceedings have been initiated, and appropriate action is being taken according to the applicable securities laws. As a matter of policy, SEBI refrains from commenting on ongoing investigations or enforcement matters.