Adani Group Rejects Allegations
The Adani Group has firmly rejected the latest allegations made by Hindenburg Research, labeling them as “malicious, mischievous, and manipulative” distortions of publicly available information. In a statement filed with the stock exchange, the Adani Group denounced the claims as a recycling of previously discredited allegations that have been thoroughly investigated and dismissed by the Supreme Court of India in January 2024. The group criticized Hindenburg as a “discredited short-seller” accused of multiple violations of Indian securities laws, accusing it of making baseless claims and displaying contempt for Indian regulations.
SEBI Chairperson Responds
SEBI Chairperson Madhabi Puri Buch, alongside her husband Dhaval Buch, has strongly refuted Hindenburg’s allegations, describing them as an attempt at “character assassination.” This response follows SEBI’s enforcement action and a show cause notice issued to Hindenburg and its founder, Nate Anderson, last month. The Buchs criticized the timing of Hindenburg’s allegations, which they argue are an attempt to deflect from SEBI’s actions against the firm for violations of Indian securities regulations and the code of conduct for research analysts.
Show Cause Notice Details
The Securities and Exchange Board of India (SEBI) had previously issued a show cause notice to Hindenburg Research and Nate Anderson, accusing them of breaching regulations under SEBI’s prevention of fraudulent and unfair trade practices, as well as the standards set for research analysts. This move came amid broader regulatory scrutiny, as even the U.S. Securities and Exchange Commission (SEC) has been tightening its oversight on short-selling activities. The show cause notice underscores SEBI’s commitment to enforcing regulatory standards and holding firms accountable for violations.
Industry Reactions and Support for SEBI Chief
The Association of Mutual Funds in India (AMFI) has come out in strong support of SEBI Chairperson Madhabi Buch, criticizing Hindenburg for attempting to create a trust deficit in the market ecosystem. AMFI, which manages nearly ₹65 lakh crore in assets, argued that the external comments targeting Buch are attempts to undermine her contributions and the overall progress of the Indian economy. They warned that unchecked allegations could hinder India’s rapid economic growth and disrupt the financial markets.
Investment Details and Allegations
The investment in question, as noted in Hindenburg’s report, was made in 2015, well before Madhabi Buch joined SEBI. Both Madhabi and Dhaval Buch have clarified that the decision to invest in the fund was influenced by the Chief Investment Officer, Anil Ahuja, who was a long-time associate and highly respected in the investment community. They emphasized that the investment decisions were made based on Ahuja’s professional reputation and track record, not on any affiliation with the Adani Group. Furthermore, they asserted that at no point did the fund invest in any Adani group securities.
Further Criticism and Political Reactions
Senior lawyer Mahesh Jethmalani has dismissed Hindenburg’s latest claims as a “pathetic damp squib,” arguing that the pre-publicity surrounding the report reveals its ulterior motive to destabilize India’s stock markets. Jethmalani criticized the short-seller for targeting SEBI’s leadership without presenting new evidence against the Adani Group.
Political figures and financial experts have also weighed in, with former Union Minister Rajeev Chandrasekhar accusing Hindenburg of participating in a global effort to destabilize the Indian economy. Chandrasekhar suggested that the Congress party might be collaborating with Hindenburg in this effort. On the other hand, IMF Executive Director KV Subramanian defended SEBI Chairperson Madhabi Buch, vouching for her “unimpeachable integrity” and criticizing the Hindenburg report for lacking intellectual rigor.
Industry and Financial Experts Weigh In
Former Infosys CEO Mohandas Pai described the allegations against SEBI Chief Madhabi Buch as “rubbish” and a form of “character assassination” orchestrated by what he termed a “Vulture Fund.” Pai denounced the Hindenburg report as sensationalist and unsupported by substantive evidence. BJP leader Sudhanshu Trivedi also labeled the report as a “conspiracy to create imbalance in India.”
Deepak Shenoy, founder-CEO of Capital Mind, a portfolio management service, criticized the Hindenburg report for its sensationalism and lack of substantive content. Shenoy argued that the report’s claims are largely unfounded and fail to address the complexities of the Indian regulatory environment.
The intense reactions from the Adani Group, SEBI Chairperson, industry leaders, and political figures highlight the contentious nature of the allegations made by Hindenburg Research. The strong defense mounted by the Adani Group and SEBI, coupled with support from various sectors, underscores the broader implications of these claims on India’s financial markets and regulatory environment. As the situation continues to unfold, it remains to be seen how these allegations will impact the regulatory landscape and the broader market dynamics in India.
(With inputs from agencies)
