SEBI issues show cause notice to Hindenburg for trading violations

Securities and Exchange Board of India (SEBI) has issued a notice to Hindenburg Research LLC, Nathan Anderson, and the entities of Mauritius-based foreign portfolio investor Mark Kingdon for trading violations in the scrip of Adani Enterprises Ltd. In the 46-page show-cause notice, the markets regulator has alleged that Hindenburg and Anderson violated regulations under the SEBI Act. The markets regulator pointed out that the Hindenburg and the FPI entities undertook a misleading disclaimer that the report was solely for the valuation of securities traded outside India when it pertained to listed entities in India.
SEBI's investigation also exposed that Kotak Mahindra and Hindenburg conspired together to take short positions in Adani shares. Hindenburg agreed to take a 25 per cent profit cut from shorting, resulting in millions of dollars in profit. Chats from Kotak Mahindra bank executives, mentioned by SEBI in their show cause notice, reveal how Kotak set up offshore funds to route money and take short positions in Adani futures, generating profits of $22.11 million.Kotak Mahindra International Ltd (KMIL) spokesperson in a statement today said KMIL and KIOF "unequivocally state that Hindenburg has never been a client of the firm nor has it ever been an investor in the Fund. The Fund was never aware that Hindenburg was a partner of any of its investors."
After markets regulator SEBI issued a show cause notice to Hindenburg over its report of alleged stock manipulation by Adani Enterprises, the research group has dismissed the notice and called its a "concocted attempt to silence those who expose corruption".