The allegations come a month and a half after SEBI issued a show cause notice to Hindenburg for violating Indian market rules and profiting by taking short positions.
Who is Hindenburg and how does he make money?
Hindenburg Research is a US-based investor-activist company founded in 2017 by Nathan Anderson. With the help of a handful of researchers, Hindenburg often uses financial forensics tools to detect potential accounting irregularities and other corporate governance-related issues in high-profile companies.
In the past, whistleblowers have targeted companies such as Nicola, Clover Health, Block Inc, Candy and Lordstown Motors.
Hindenburg’s business model is simple – it shares reports with its clients in advance as they benefit by taking short positions in target companies before the report is out in the public domain. As the company’s stock fell after the report was published, both Hindenburg and its customers benefited financially.
In Adani’s case, Hindenburg admitted making $4.1 million in gross revenue but said it would barely break even given the high costs of running a two-year global investigation.
Why suddenly Hindenburg after Sebi?
Hindenburg has been on the backfoot in the Adani case ever since the Supreme Court refused to hand over the probe to the CBI or set up an SIT.
While the SEBI probe into claims of stock manipulation and the aftermath of the Hindenburg market crash is yet to be concluded, Adani Group shares recovered all their Hindenburg-era losses in June this year.
Last month, Hindenburg wrote another blog post dragging Kotak Mahindra Bank into a controversy and this time it was Sebi.
Hindenburg said Sebi chairperson Madhabi Puri Buch and her husband Dhaval Buch had stakes in offshore funds based in Bermuda and Mauritius that were used by Gautam Adani’s brother Vinod Adani to “accumulate and trade large positions in Adani Group stocks”.
“In short, despite the existence of thousands of mainstream, reputable onshore Indian mutual fund products, an industry that is now responsible for its regulation, documents show that SEBI chairperson Madhabi Buch and her husband held stakes in a multi-tier offshore fund structure with minimal assets. , across known high-risk jurisdictions, overseen by a company with reported ties to the Wirecard scam, run by an Adani director in the same entity and used significantly by Vinod Adani in the alleged Adani cash siphoning scam,” the report said. is
What does SEBI chief Madhabi Puri Buch say in his defence?
The Buch family has issued a statement strongly denying the “baseless allegations and attacks”.
“It is devoid of any truth. Our life and finances are an open book. All required disclosures have been made to SEBI over the years. We have no hesitation in disclosing any and all financial documents, including those. The period when we were strictly private citizens, to any and every authority that could find them,” said Madhabi and Dhaval Buch.
It is unfortunate that Hindenburg Research, against which SEBI has taken enforcement action and issued a show cause notice, chose to attempt character assassination in response, the family said.
Are the Adanis and the Butch families connected?
Adani has denied any “business ties” with the Buch family, as the report alleges, calling it a “red herring” — a misleading allusion.
“The Adani Group has no professional relationship with the persons or matters mentioned in this calculated and deliberate attempt to malign our position. We remain steadfast in transparency and compliance with all legal and regulatory requirements,” the group said.
For a disgraced short-seller under the scanner for multiple violations of Indian securities laws, the Hindenburg allegations are no more than a red herring thrown by a desperate entity with complete contempt for Indian laws, it said.
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