“Malicious, mischievous and manipulative selections of publicly available information” to arrive at “predetermined conclusions for personal profiteering with wanton disregard for facts and the law” is how the Adani Group described the most recent accusations made by Hindenburg Research yesterday.
In a stock exchange filing, the Adani Group completely rejected these allegations “which are a recycling of discredited claims that have been thoroughly investigated, proven to be baseless and already dismissed by the Honourable Supreme Court in January 2024”.
“For a discredited short-seller under the scanner for several violations of Indian securities laws, Hindenburg’s allegations are no more than red herrings thrown by a desperate entity with total contempt for Indian laws,” the Adani Group said.
The allegations made against them by Hindenburg were vehemently refuted by Madhabi Puri Buch, the chairperson of the Securities and Exchange Board of India (SEBI), and her husband Dhaval Buch, referring to it as a “character assassination attempt” since last month the US-based short seller led by Nate Anderson received an enforcement action and a show cause notice.
“It is unfortunate that Hindenburg Research against whom SEBI has taken an enforcement action and issued a show cause notice has chosen to attempt character assassination in response to the same,” Madhabi Buch and Dhaval Buch said in a joint statement.
Last month, the capital markets regulator declared that Hindenburg and Nate Anderson had broken the research analyst code of conduct as well as the legislation under which SEBI prevents unfair and fraudulent trade activities.
Even the Securities and Exchanges Commission (SEC), the US market regulator, has been tightening its grip, so short-sellers like Hindenburg may find themselves in hot water.
According to the Association of Mutual Funds in India (AMFI), Hindenburg is attempting to erode Madhabi Buch’s excellent work and cause a lack of trust in the market ecosystem. “Recent external comments on the regulator’s chairperson not only attempt to undermine Madhabi Buch’s contribution to the Indian capital market, but it also undermines our country’s economic progress, and creating a trust deficit in the market ecosystem must be seen for what they truly are – attempts to create sensation by connecting random events done in the past,” the industry having nearly ₹ 65 lakh crore in asset under management said.
The world’s fastest-growing economy could face needless obstacles if the accusations are not investigated, according to AMFI. It said Hindenburg’s statements “seek to malign the hard-earned achievements of our nation” and lacked context and knowledge of the Indian regulatory framework.
The pair said in a statement that they invested in the fund mentioned in the Hindenburg report in 2015, almost two years before Madhabi Buch joined SEBI as a Whole Time Member and when both of them were private citizens residing in Singapore.
“The decision to invest in this fund was because the Chief Investment Officer, Anil Ahuja, is Dhaval’s childhood friend from school and IIT Delhi and, being an ex-employee of Citibank, J.P. Morgan and 3i Group plc, had many decades of a strong investing career. The fact that these were the drivers of the investment decision is borne out by the fact that when, in 2018, Ahuja, left his position as CIO of the fund, we redeemed the investment in that fund,” the statement said.
“As confirmed by Anil Ahuja, at no point in time did the fund invest in any bond, equity, or derivative of any Adani group company,” the statement said.
Senior lawyer Mahesh Jethmalani slammed Hindenburg’s latest claims as “pathetic damp squib”. “The announcement prior to its alleged big revelation itself reveals its motive: to destabilise India’s stock markets. The pre-publicity ill behoves a reputed ‘research analyst’,” he said. “There being nothing new against the Adani group,” the US short seller is targeting the SEBI chairperson, Mr Jethmalani added.
The report has been dismissed by financial experts and politicians alike. IMF Executive Director KV Subramanian defended the integrity of the SEBI chief, despite allegations made by former union minister Rajeev Chandrasekhar of a global plot to destabilise the Indian economy. Mr. Chandrasekhar accused the Congress of having a “partnership” with Hindenburg and referred to the study as an attack on the market regulator.
Former Infosys CEO Mohandas Pai said the allegations against the SEBI chief are rubbish and a “character assassination by a Vulture Fund.” “Rubbish allegations aimed at sensationalism. There was a Supreme Court-monitored investigation overseen by an eminent panel and when the Vulture Fund was fully exposed, it threw mud,” Mr Pai said.
Senior BJP leader Sudhanshu Trivedi too called the Hindenburg report a “conspiracy to create imbalance in India”.
Deepak Shenoy, the founder-CEO of Capitalmind, a portfolio management service, said the Hindenburg report has gone into “sensationalism” and there’s “hardly any substance”.
KV Subramanian, former chief economic adviser, vouched for the “unimpeachable integrity” of Madhabi Buch and said the report lacked intellectual rigour. “I’ve personally known SEBI chairperson Madhabi for about two decades. Given her unimpeachable integrity and her intellectual prowess, I’m sure she will shred to smithereens this Hindenburg hit job,” said Mr Subramanian, who is now an Executive Director with the International Monetary Fund.
