SEBI, India's securities regulator, denies accusations made by Hindenburg against the Adani group.
The Securities and Exchange Board of India (SEBI) has dismissed allegations of stock manipulation and fraud against Gautam Adani and his group of companies made by U.S. short-seller Hindenburg Research. The regulator concluded in 2023 that the Adani Group did not violate any rules in relation to allegations from Hindenburg Research about related-party transactions and fund routing through private firms.
The investigations by SEBI were prompted by allegations made by Hindenburg Research, which had accused Adani Ports & Special Economic Zone Ltd., Adani Power Ltd., and Adani Enterprises Ltd. of structuring transactions with three other unrelated companies in a manner to conceal that they were actually between connected parties and ought to have been disclosed to investors.
However, SEBI found that the transactions between Adani group companies and companies flagged by Hindenburg were not considered related-party transactions and did not violate regulatory norms on disclosures or constitute market manipulation. The regulator dismissed these allegations, stating that the transactions did not happen between connected entities and hence did not require disclosures or the consent of minority investors.
The accusations led to a $150-billion sell-off of the group's stock in January 2023. Since then, the shares of Adani Group companies have since recovered. Gautam Adani, chairman of Adani Group, stated that SEBI's reaffirmation confirmed that the Hindenburg claims were baseless.
Nathan Anderson, founder of Hindenburg Research, has announced he will disband the firm in January. Reuters has reached out to Hindenburg Research and its founder on their last known email addresses but has not received a response regarding SEBI's dismissal of their allegations against the Adani group companies.
SEBI began investigating Adani Group companies, including Adani Ports, Adani Power, and Adani Enterprises, in 2023. The transactions under investigation occurred between April 2012 and March 2021. The regulator widened the ambit of disclosures of transactions between connected entities in 2022, but cannot apply its rules retroactively, according to the regulator.
Short-sellers like Anderson bet against companies they believe have accounting issues, mismanagement, or fraud, which they find usually after a long period of investigation. The Adani Group has consistently denied any wrongdoing and has maintained that the allegations are unfounded and motivated by malicious intent.
Gautam Adani, chairman of Adani Group, has not made any recent statements regarding SEBI's findings on the allegations made by Hindenburg Research. Despite the clearance from SEBI, the Adani Group continues to face scrutiny from various quarters, including international agencies and investors. The group has been working to address these concerns and rebuild investor confidence.
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