According to the blog post, the research company acquired its short position in Adani shares “by means of an agreement with an investor partner who was indirectly short Adani derivatives via an offshore fund structure that was not based in India.”
The US-based Hindenburg Research said in a blog post on July 2 that it had received a show cause notice on its Adani Report from market regulator SEBI.
According to Hindenburg, the 46-page show cause notice was delivered on June 27. According to the blog post, the research company acquired its short position in Adani shares “by means of an agreement with an investor partner who was indirectly short Adani derivatives via an offshore fund structure that was not based in India.”
Hindenburg had sufficiently stated that it was short on Adani shares, according to the post that exposed the SEBI notification, “so readers could weigh the potential for bias given that we stood to benefit from a decline in Adani shares.”
According to the blog post, Kotak Bank established the offshore vehicle that its investor partner utilized to short Adani shares. “Kotak Bank, one of India’s largest banks and brokerage firms founded by Uday Kotak, which created and oversaw the offshore fund structure used by our investor partner to bet against Adani” , stated the statement.
In addition, market regulator SEBI notes in the Hindenburg blog post that the research study “contained certain misrepresentations/inaccurate statements” intended to “mislead readers.” Hindenburg stated that such “misleading statements are generally the crux of any fraudulent’scheme,’ thus these findings would be crucial for a case advanced by any credible regulator,” disputing the notice’s assertion.