Sebi accuses Hindenburg of ‘sharing’ Adani report with client two months before publishing it

Charges Hindenburg of making 'unfair' profits from 'collusion' to use 'non-public' and 'misleading' information and induce "panic selling" in Adani Group stocks

New Delhi: US short-seller Hindenburg Research had shared an advance copy of its damning report against Adani Group with New York-based hedge fund manager Mark Kingdon about two months before publishing it and profited from a deal to share spoils from share price movement, according to market regulator Sebi.

The Securities and Exchange Board of India (Sebi), in its 46-page show cause notice to Hindenburg, detailed how the US short seller, the New York hedge fund and a broker tied to Kotak Mahindra Bank benefited from the over $150 billion routs in the market value of Adani group’s 10 listed firms post-publication of the report.

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Sebi charged Hindenburg of making “unfair” profits from “collusion” to use “non-public” and “misleading” information and induce “panic selling” in Adani Group stocks.

Hindenburg, which made public the Sebi notice, in its response, has described the show cause as an attempt to “silence and intimidate those who expose corruption and fraud perpetrated by the most powerful individuals in India” and revealed that the vehicle used to bet against Adani’s flagship firm Adani Enterprises Ltd belonged to Kotak Mahindra (International) Ltd, a Mauritius-based subsidiary of Kotak Mahindra Bank Ltd.

KMIL’s fund placed bets on Adani Enterprises Ltd for its client Kingdon’s Kingdon Capital Management. Sebi notice includes extracts of time-stamped chats between an employee of the hedge fund and KMIL traders for selling future contracts in AEL.

Kotak Mahindra Bank has stated that Kingdon “never disclosed that they had any relationship with Hindenburg nor that they were acting on the basis of any price-sensitive information”.