Updated 14:23 IST, July 2nd 2024
5 highlights from Hindenburg’s response to SEBI’s show cause notice
The firm describes the notice as "nonsense, concocted to serve a pre-ordained purpose: an attempt to silence and intimidate those who expose corruption."

Hindenburg’s response: Hindenburg Research, the US-based short-selling research firm whose report on Adani Group triggered a 60 per cent decline in the stock of the company has responded to a 'show cause notice' from the Securities and Exchange Board of India (SEBI).
The firm describes the notice as "nonsense, concocted to serve a pre-ordained purpose: an attempt to silence and intimidate those who expose corruption and fraud perpetrated by the most powerful individuals in India." Here are other highlights from the Hindenburg's response to the market watchdog.
SEBI pressurised stock brokers to close Adani's short positions
Hindenburg research alleges SEBI of pressurising stock brokers in the country to close short positions in Adani after the research firm released the report alleging Adani of grave corporate irregularities. Hindenburg said that SEBI created buying pressure for Adani stocks that stopped the company’s free fall after the revelation.
Hindenburg wrote, “Following our report, we were told that SEBI pressured brokers behind the scenes to close short positions in Adani under the threat of expensive, perpetual investigations, effectively creating buying pressure and setting a ‘floor’ for Adani’s stocks at a critical time.”
Entire world knew we would be shorting Adani: Hindenburg Research
Hindenburg in its response said that SEBI’s notice was designed to imply that “our legal and disclosed investment stance was something secret or insidious.” The US-based short-selling firm also denies SEBI’s jurisdiction as it is based in the USA with “zero Indian entities, employees, consultants or operations”.
Hindenburg also repudiated SEBI’s claim of the firm publishing a misleading disclaimer saying that its short positions in Adani were not a mystery. “Virtually everyone on earth knew we were short Adani because we prominently and repeatedly disclosed it,” the research firm said.
SEBI is protecting yet another powerful Indian businessman: Hindenburg
Hindenburg shared that Kotak Mahindra Investments Limited “created and oversaw the offshore fund structure” used by Hindenburg’s investor partner to bet against Adani. The short seller alleged SEBI of masking Kotak’s name under the acronym ‘KMIL.’ Instead, it simply named the K-India Opportunities fund and masked the “Kotak” name with the acronym “KMIL”
Hindenburg, for the first time in its responses, named Uday Kotak, the founder and former CEO of the Kotak Mahindra Bank, suggesting that SEBI is trying to underplay the role of its former Corporate Governance Chief in the Adani short-selling bets to ‘protect yet another powerful Indian businessman’.
“Uday Kotak, founder of the bank, personally led SEBI’s 2017 Committee on Corporate Governance. We suspect SEBI’s lack of mention of Kotak or any other Kotak board member may be meant to protect yet another powerful Indian businessman from the prospect of scrutiny, a role SEBI seems to embrace,” Hindenburg said.
No factual inaccuracies in our report, SEBI is upset about vocabulary: Hindenburg
Hindenburg in the response to the showcase notice detailed how a Directorate of Revenue Intelligence (DRI) investigation accused Adani of circular trading of diamonds, earning illicit export credits of $151 million. However, the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) dismissed these findings, disregarding the DRI's conclusions.
Hindenburg said that SEBI did not dispute Hindenburg's facts but argued that Hindenburg "sensationalised" the issue by calling it a "scandal."
It also shared its allegations about stock market manipulation by Ketan Parekh which SEBI did not deny but said, “It was a misrepresentation to call the reduction in punishment leniency.”
Adani research was not financially justifiable: Hindenburg
Hindenburg also mentioned that the Adani investigation was not justifiable from a financial or personal safety perspective for the research firm and the profits made by the firm in its Adani short positions was ‘barely breakeven’.
“We have made ~$4.1 million in gross revenue through gains related to Adani shorts from that investor relationship. We made just ~$31,000 through our own short of Adani US bonds held into the report.”
Hindenburg also cited the Adani research as “by far the work we are most proud of.”
Published 14:14 IST, July 2nd 2024