New Delhi:

Lawyer Jai Anant Dehadrai launched an attack on Hindenburg Research chief Nate Anderson after reports said the US short seller is under scrutiny for securities fraud.

In documents filed at the Ontario Superior Court of Justice in a defamation suit, the head of Canada’s Anson hedge fund, Moez Kassam, said his firm shared research “with a wide variety of sources” including Nate Anderson.

The Market Frauds portal said court documents allegedly showed Hindenburg colluded with Anson while preparing a report.

While short sellers borrow a security, sell it on the open market, and expect to repurchase it for less money after their damning report against the company brings stock down, involvement of hedge funds raises eyebrows as they could also place parallel bets, putting more downward pressure on stock prices.

Reacting to the development, Mr Dehadrai, a noted white-collar criminal law practitioner, said in a post on X, “Big News. Nate Anderson, founder of Hindenburg Research, is now under scrutiny for securities fraud for sharing non-public information with hedge funds before releasing his firm’s reports. Court documents from Canada suggest that Anderson conspired with Canada’s Anson Funds, providing them with early drafts of Hindenburg’s reports.”

“This practice absolutely amounts to market manipulation and insider trading, as it would have allowed hedge funds to profit from anticipated stock movements triggered by Hindenburg’s reports. Shocking revelations in emails between Anderson and Anson Funds . Question is, who profited from their fake report on Adani Stock in India?” the lawyer said.

Big News.

Nate Anderson, founder of Hindenburg Research, is now under scrutiny for securities fraud for sharing non-public information with hedge funds before releasing his firm’s reports.

Court documents from Canada suggest that Anderson conspired with Canada’s Anson Funds,… pic.twitter.com/XkMhMc3cyc

— Jai Anant Dehadrai (@jai_a_dehadrai) January 19, 2025

Mr Anderson – days before Donald Trump’s presidential inauguration – announced he would shut down Hindenburg. This led to speculation especially in India that he wanted to avoid a possible India and US investigation into Hindenburg, whose report targeted the Adani Group and led to huge losses for investors.

The Adani Group refuted all the allegations by Hindenburg, and eventually the group firms recovered and reached new heights in the markets, proving they have the trust of investors.

In the latest development linked to Mr Anderson, if it can be proven that the bearish reports were prepared without disclosure of participation, it can be charged as securities fraud by the US Securities and Exchange Commission (SEC).

“We know for a fact, from the email conversations between Anderson and Anson Funds, that he was indeed working for Anson and published whatever they told him to, from the price target to what should and shouldn’t be in the report. He asked them multiple times if they needed ‘more’. From what we can see in the dozens of exchanges, at no time did he have editorial control. He was being told what to publish,” the Market Frauds portal reported.

It also shared screenshots of some email interactions – which it claims to have accessed through the documents available with the Ontario court – between Hindenburg and Anson to support its charge.

Mr Dehadrai also shared the same screenshot.

In 2020, Hindenburg Research published a report on Facedrive, a Canadian company that went public through a reverse merger as an eco-friendly ride-sharing service, chiding it for being over valued and lavishly paying promoters.

Anson allegedly exchanged emails with Mr Anderson over the report and court documents reveal the hedge fund had knowledge of when the report was to be published.

The filings follow a separate years-long investigation by the US Justice Department and the Securities and Exchange Commission. In June, Anson Funds Management and Anson Advisors Inc, without admitting or denying any wrongdoing, agreed to pay $2.25 million to settle SEC claims that they failed to tell clients about payments to outside publishers of bearish research.

With inputs from PTI

(Disclaimer: New Delhi Television is a subsidiary of AMG Media Networks Limited, an Adani Group Company.)

New Delhi:

Jai Anant Dehadrai, the lawyer who last year accused a Trinamool MP of accepting bribes to ‘target’ the Adani Group, reacted Thursday to news Hindenburg Research – the United States-based short seller that alleged, with no apparent evidence, financial impropriety by the business giant – will be disbanded.

In a lengthy post on X this morning, Mr Dehadrai also linked Hindenburg shutting down to the return of Donald Trump as the US President on January 20; earlier an influential member of Mr Trump’s party had called out a decision by the outgoing government, led by Joe Biden, to probe certain Adani firms.

Mr Dehadrai also hit out at the Trinamool leader – labelling the person a “crooked puppet who tried spinning a conspiracy-theory (around Hindenburg’s allegations), particularly against the Prime Minister (Narendra Modi)”, and demanded the MP be “subjected to rigorous custodial inquiry”.

“With Hindenburg shutting down mere days before Trump takes office, the message couldn’t be clearer: the attacks on Prime Minister Modi, the Adani Group, and India’s stock market regulator (the Securities and Exchange Board of India) were not just about profit – they were part of a calculated and synchronised effort to sow instability in India,” Mr Dehadrai alleged.

“But here’s where it gets truly interesting. With (Hindenburg founder) Nate Anderson now fully exposed and in retreat – who were the crooked puppets in India who tried spinning a conspiracy-theory around the above mentioned entities?”

With Hindenburg shutting down mere days before Trump takes office, the message couldn’t be clearer: the attacks on Prime Minister Modi @narendramodi, the Adani Group @gautam_adani, and India’s stock market regulator @SEBI_India were not just about profit—they were part of a…

— Jai Anant Dehadrai (@jai_a_dehadrai) January 16, 2025

“Will the former MP who orchestrated many of these attacks in India, particularly against the Prime Minister, be fully investigated and subjected to a rigorous custodial inquiry and global financial audit?” he continued, claiming, “The money-trail from this individual will lead to some of the most notorious criminal entities to have ever existed – worldwide.”

Earlier today, Mr Anderson, in a note on Hindenburg’s website, said the company would be shut down after completion of pending projects. The announcement comes days before Mr Trump is to take office. However, Mr Anderson claimed no threat in the decision to close his firm.

READ | US Short Seller Hindenburg, Which Targeted Adani Group, To Shut

In 2022, Hindenburg Research made multiple allegations of financial impropriety by the Adani Group. The charges were firmly and completely denied by the company, which trashed them as “nothing but lies” and called them “calculated attacks on India and the Indian economy”.

READ | Adani Group Refutes Hindenburg Allegations, Calls It “Attack On India”

Later the Supreme Court gave both the Adani Group and SEBI a clean chit.

READ | Supreme Court Backs Clean Chit To Adani Group In Hindenburg Row

The allegations were recycled in August last year.

They were once again firmly dismissed; the business behemoth’s chairman, Gautam Adani, slammed the “dual assault targeting our financial stability and pulling us into a political storm”. “It was a calculated move,” he said.

READ | Adani Group, SEBI Chief, Industry Leaders Slam “Discredited” Hindenburg

Hindenburg also targeted SEBI chief Madhavi Puri Buch and her husband, both of whom called the allegations an “attempt at character assassination”. This was after the markets’ regulator flagged what it said were violations by Hindenburg and its sole owner, Mr Anderson.

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(Disclaimer: New Delhi Television is a subsidiary of AMG Media Networks Limited, an Adani Group Company.)

New Delhi:

The BJP today slammed Congress leader Rahul Gandhi for raising questions on the integrity of Indian stock markets based on the latest allegations by  US-based short seller Hindenburg.  

“The Leader of Opposition is now openly inciting and seeding doubt about the genuineness of the Indian stock markets. This blatant attempt to undermine confidence in our economy reveals the true intention of Rahul Gandhi, which is nothing but the destruction of India,” BJP leader Amit Malviya said in a post on X (formerly Twitter).  

He said that Mr Gandhi’s remarks come despite the expert committee appointed by the Supreme Court concluding there was no regulatory failure regarding the allegations of price manipulation made by Hindenburg.

“On Jan 3, 2024, the Supreme Court, led by CJI DY Chandrachud, observed that no willful or deliberate violations were done by SEBI,” Mr Malviya said.

Rahul Gandhi had alleged that there was significant risk in the Indian stock markets and that the “integrity” of the Securities and Exchange Board of India (SEBI) was “gravely compromised” by the allegations against its chairperson.

The new Hindenburg report claimed that SEBI Chairperson Madhabi Puri Buch and her husband Dhaval Buch had stakes in offshore entities involved in the alleged Adani money siphoning scandal.

The SEBI Chairman and the Adani Group, however, have labelled these allegations as “baseless” and “malicious”. Madhabi Puri Buch has also pointed out that the latest release by Hindenburg comes after SEBI took enforcement action and issued a show-cause notice to them in July.

Madhabi Puri Buch, chairperson of the Securities and Exchange Board of India (SEBI). File
| Photo Credit: PTI

Reacting to the Buchs’ rebuttal of their report red-flagging their investments in obscure offshore funds linked to the Adani group and ownership of consulting firms in Singapore and India, Hindenburg Research in a series of posts on X said the clarification contains several important ‘admissions’, raises fresh questions and confirms a ‘massive conflict of interest’.

“Buch’s response now publicly confirms her investment in an obscure Bermuda/Mauritius fund structure, alongside money allegedly siphoned by Vinod Adani. She also confirmed the fund was run by a childhood friend of her husband, who at the time was an Adani director. SEBI was tasked with investigating investment funds relating to the Adani matter, which would include funds Ms. Buch was personally invested in and funds by the same sponsor which were specifically highlighted in our original report. This is obviously a massive conflict of interest,” the firm pointed out.

On Ms. Buch’s remarks that her husband used the consulting entities, starting in 2019 to transact with unnamed “prominent clients in the Indian industry”, Hindenburg asked if these included clients SEBI is tasked with regulating.

Pointing to the promise of a “commitment to complete transparency” in the SEBI chief’s joint statement with her spouse, Hindenburg Research asked if she will publicly release the “full list of consulting clients and details of the engagements, both through the offshore Singaporean consulting firm, the Indian consulting firm and any other entity she or her husband may have an interest in”.

U.S. short-seller Hindenburg Research launched a broadside against market regulator SEBI chairperson Madhabi Buch, alleging she and her husband had stakes in obscure offshore funds used in the alleged Adani money siphoning scandal.

SEBI Chairman Buch and her husband have denied the allegations as baseless and asserted their finances are an open book.

The Adani Group termed the latest allegations malicious and based on manipulation of select public information. The company said it has no commercial relationship with SEBI chairperson or her husband.

New Delhi:

Industrialists, political leaders and investors have crticised US short seller Hindenburg Research over its latest allegations targetting the chairperson of market regulator SEBI and Adani Group. The Group has denied any commercial relation with SEBI’s chairperson Madhabi Puri Buch.

A section of political leaders have also accused the Congress of being behind Hindenburg’s move.

“Congress is seeking foreign help to discredit, destabilise our financial markets and to create chaos in the country by attacking independent regulator SEBI and by casting aspersions on the chairman of SEBI,” said Union Minister Rajeev Chandrasekhar.

“The Congress has only one job — spreading anarchy in the country, confuse people and get them to focus on divisive issues,” agreed his cabinet colleague Jyotiraditya Scindia.

Economist Dr Jaijit Bhattacharya questioned the locus standi of Hindenburg. If they are a short-selling entity go ahead within the law, make your money”.

“What is the motivation for coming back and investing money for investigation? Is it an investigatino body? is it sanctioned by some authority? Or is it a journalistic body making suo motu investigations”,” he said.

“It is yellow journalism they are indulging in, because if you go line by line into what they are saying, each line seems to be a baseless allegation,” Mr Bhattacharya added.

Business leader Sandip Ghose said the entire episode appears a “huge conspiracy”. “It is not a question of SEBI stonewalling… If the irregularity was so large, would it not have come out in the Supreme Court inquiry?” he said.  

SEBI’s former Executive Director JN Gupta said the allegations would not affect the market. “When the allegations first came 15-20 months ago, the market took a hit… today Adani shares have recuperated and investors have recouped their losses,” he said.

“There being nothing new against the Adani group,” the US shortseller is targeting SEBI’s chairperson Madhabi Puri Buch, said senior advocate Mahesh Jethmalani. “They went to the Supreme Court, the Supreme Court dismissed it,” he added.

Senior advocate Mahesh Jethmalani has slammed US-based short-seller Hindenburg Research’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”,” read his post on X, formerly Twitter. “There being nothing new against the Adani group,” the US shortseller is targeting SEBI’s chairperson Madhabi Puri Buch, Mr Jethmalani added.

#Hindenburg‘s “Something big” is a 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 “. As regards the “big” something there is… https://t.co/QeKNO4gEFp

— Mahesh Jethmalani (@JethmalaniM) August 11, 2024

Hindenburg’s Saturday’s allegations has been slammed by the industry, the ruling BJP and others.

The Adani Group has termed the allegations “malicious, mischievous and manipulative” . The group said it has no commercial relationship with SEBI chairperson or her husband.

“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 group said in an exchange filing.

Last month, market regulator SEBI (Securities Exchange Board of India) had sent a show-cause notice to Hindenburg and its sole beneficial owner Nathan Anderson. The regulator had flagged violations by Hindenburg and Anderson under the SEBI Act, SEBI’s Prevention of Fraudulent and Unfair Trade Practices regulations, and SEBI’s Code of Conduct for Research Analyst regulations.

“SEBI had issued a notice to Hindenburg seeking information regarding the circumstances of the Adani short sale as it was entitled to. Instead of responding to these Hindenburg has chosen to attack its Chairperson on the ground of conflict of interest,” Mr Jethmalani said.

“The picture thus is one of a US based profiteer who made millions of dollars at the cost of Indian retail investors now hedging questions legitimately asked by the Indian regulator and brazenly defaming the latter without answering its questions. This reeks of colonial arrogance of days bygone,” his post read.

“It is time the govt of the day turned its serious attention to these anti nationals who have no other agenda but to  disrupt  India’s social fabric, distort its polity and now devastate its economy,” he added.

New Delhi:

Politicians and financial experts have rejected the latest report by the US-based short-seller Hindenburg Research targeting the Securities Exchange Board of India (SEBI) chief.

While former Union minister Rajeev Chandrasekhar alleged a global attempt at destabilizing the Indian economy, IMF Executive Director KV Subramanian backed the SEBI chief’s integrity.

Mr Chandrasekhar called the report an attack on the market regulator and accused the Congress of being in a “partnership” with Hindenburg.

Lets be clear – this attack on @SEBI_India by a foreign bank #Hindenburg, is an obvious partnership wth the Cong and has a ominous motive and goal.

To destabilize, discredit one of the worlds strongest financial systems and create chaos in worlds fastest growing Ecinomy ie…

— Rajeev Chandrasekhar (@RajeevRC_X) August 11, 2024

“Lets be clear – this attack on @SEBI_India by a foreign bank #Hindenburg, is an obvious partnership with the Cong and has an ominous motive and goal. To destabilize, discredit one of the world’s strongest financial systems and create chaos in world’s fastest growing Economy i.e. India. On this let there be no doubt,” he said on Twitter.

Mr Chandrasekhar said the report had the “classic Congress stye innuendo and lies glued together with a few grains of truth – aimed at discrediting regulator and causing chaos and losses in markets for investors – thus slowing down bullish sentiments.”

“I have said often and say again – Many global forces with the help of Congress dynasty want slow down or trip up India’s rise. We won’t let them,” said the former minister.

The announcement by Hindenburg that “something big” proved to be a “pathetic damp squib”, said lawyer and BJP leader Mahesh Jethmalani, adding that the aim appears to be to “destabilise India’s stock markets”.

“As regards the “big” something there is nothing new against the #Adani group. The target is now the regulator- #SEBI’s -Chairperson #MadhabiPuriBuch. SEBI had issued a notice to Hindenburg seeking information regarding the circumstances of the Adani short sale as it was entitled to. Instead of responding to these Hindenburg has chosen to attack its Chairperson on the ground of conflict of interest (more on the grounds on which the attack is based  after Ms Buch issues a detailed statement as announced; suffice it to say that the grounds are prima facie rubbish),” said Mr Jethmalani in a post on X. 

“The picture thus is one of a US based profiteer who made millions of dollars at the cost of Indian retail investors now hedging questions legitimately asked by  the Indian regulator and brazenly defaming  the latter without answering its questions,” Mr Jethmalani added. 

#Hindenburg‘s “Something big” is a 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 “. As regards the “big” something there is… https://t.co/QeKNO4gEFp

— Mahesh Jethmalani (@JethmalaniM) August 11, 2024

The BJP leader attacked the “left-leaning media outlets” for going after the SEBI chairperson and urged the government of the day to pay “serious attention to these anti nationals who have no other agenda but to  disrupt  India’s social fabric, distort its polity and now devastate its economy”. 

Former Infosys CEO Mohandas Pai said that the latest Hindenburg allegations against the SEBI are rubbish and a “character assassination by a Vulture Fund.”

“Rubbish allegations aimed at sensationalism. There was a SC-monitored investigation overseen by an eminent panel and when the Vulture Fund was fully exposed, it throws mud,” Mr Pai posted on X.

Senior BJP leader Sudhanshu Trivedi too called the Hindenburg report a “conspiracy to create imbalance in India”.

VIDEO | “A report came from Hindenburg, which has been on radar of the Indian investigating agencies. The Opposition is speaking in tandem with them, they have also raised this in Parliament session. It is a conspiracy to create imbalance in India. I want to ask why these foreign… pic.twitter.com/fJ50QGW6O7

— Press Trust of India (@PTI_News) August 11, 2024

“I want to ask why these foreign reports come at the time of the Parliament session? I want to allege that Congress leaders knew that the report was coming. It is clear that the Opposition wants to create imbalance in India,” said the Rajya Sabha MP.

Deepak Shenoy, the founder-CEO of Capitalmind – a portfolio management service, feels the Hindenburg report has gone into “sensationalism”, but there’s “hardly any substance”.

Someone’s already short and gonna cover their shorts after releasing a mostly sensational and some fact oriented report, and if you’re wondering who the Patsy is, it’s you 🙂

Facts like oh he had dinner with this guy twice so we should consider both of them promoters.

— Deepak Shenoy (@deepakshenoy) August 10, 2024

“Someone’s already short and gonna cover their shorts after releasing a mostly sensational and some fact oriented report, and if you’re wondering who the Patsy is, it’s you 🙂 Facts like oh he had dinner with this guy twice so we should consider both of them promoters,” he said on X.

“You can’t refute this. If you do, you’ll be called a crony or whatever. Some brokers will be told to advise their customers to sell. Uncle will cover his shorts. Trp goes up. GDP goes up. Good for everyone. Break a window and replace it is good for GDP. 🙂 I think it’s good though cos it will be educative, in whatever little facts and all the entertainment, and then perhaps some good opportunities come our way,” added Mr Shenoy.

KV Subramanian, former chief economic adviser of India, vouched for the “unimpeachable integrity” of SEBI boss Madhabi Puri Buch and said that 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 Hindenberg hit job.
In this wonderful thread by @BhagwaanUvacha on the report, the bottom line is in… https://t.co/yYuOkRLZuX

— Prof. Krishnamurthy V Subramanian (@SubramanianKri) August 11, 2024

“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 Hindenberg hit job,” said Mr Subramanian, who is now an Executive Director with the International Monetary Fund.

“While I’ve not read the report, I’ve read this wonderful thread by @BhagwaanUvacha. The bottom line is in this tweet, which demonstrates clearly that the report lacks intellectual rigour and was a hit job. I’m not surprised about the lack of intellectual rigour…” said the top economist.

Tax Compaas founder Ajay Rotti called the Hindenburg report “an attempt to get the Indian markets to tank at any cost.”

The #Hindenburg report is clearly an attempt to get the Indian markets to tank at any cost. What exactly a short seller gains from!

While the screenshots and letters/emails appear as proof or strong evidence, the Hindenburg report actually lack substance and has a silly…

— Ajay Rotti (@ajayrotti) August 11, 2024

“This report has been published just to divert attention from scrutiny of Hindenburg themselves and their short trade…. the report calls the SEBI show cause to them as “apparent show cause notice”,” said Mr Roti on X. He further said it was a desperate effort to bring India markets down and create uncertainty, doubt and panic amongst its investors – both domestic and foreign.

Madhabi Puri Buch and her husband Dhaval had earlier in the day denied the report and called it an attempted “character assassination” in response to the SEBI’s July action against Hindenburg.

The Adani Group, too, in an exchange filing, has rejected the report as “recycled claims” that were earlier “proven baseless and dismissed by the Supreme Court.”

(Disclaimer: New Delhi Television is a subsidiary of AMG Media Networks Limited, an Adani Group Company.)

New Delhi:

The whole “crony capitalism” campaign against the Adani Group has backfired, and those who celebrated the Hindenburg Research “hit job” on the Adani Group “have egg on their faces”, senior lawyer Mahesh Jethmalani told NDTV.

Mr Jethmalani has also pointed to a possible Chinese hand in the short seller’s “hit job” on the Adani Group, and criticised the Congress party of inexplicably behaving “with such gusto” over the matter.

“This whole campaign [against Adani Group] has backfired. Initially, it did seem to have some political fallout; it certainly had a market fallout on Adani Group firms’ market cap, and retail investors took a big hit. Since then the Supreme Court clean chit has come, and Adani Group companies’ shares have returned to pre-Hindenburg levels,” Mr Jethmalani told NDTV.

“The only ones who have egg on their faces now are those who had taken this [Hindenburg row] up as a crony capitalism issue, and not for what it really was – a Chinese hit job on Adani Group, which was serving India’s strategic interests,” he said.

To a question on China’s alleged hand in the Hindenburg row, Mr Jethmalani, who’s also a Rajya Sabha MP from the BJP, said it would appear so [the Chinese Communist Party is targeting the Adani Group]. “The Supreme Court has given a clean chit on a complaint by a co-host of the Congress party, except for one or two matters which are pending. So this seemed to be a hit job by China,” he said.

Mr Jethmalani referred to Anla Cheng, a businesswoman who is under investigation in the US for allegedly subverting US interests and promoting China’s strategic interests.

“At that time I didn’t know about Anla Cheng. China is extremely upset about having lost three bits, to my knowledge, of overseas projects of strategic interests – a railway line in Australia; a port in Jaffna, and a port in Haifa, Israel. That was the most important one,” he said. “This hit job was in close proximity to the losing of these contracts. Why the Congress party has gotten into it with such gusto, only they can explain it,” the senior lawyer told NDTV.

He said new facts have come to light after Hindenburg’s response to a notice by the capital markets regulator Securities and Exchange Board of India (SEBI) became public. Hindenburg has said it was only a researcher that was given a contract by a company owned by US-based fund manager Mark E Kingdon.

A trust fund in which Mr Kingdon and his Chinese-origin wife, Anla Cheng, held 36 per cent was used in the hit job against Adani Group companies, Mr Jethmalani said.

“At the same time they also entered into an agreement with a Kotak investment outfit, which set up a special purpose vehicle KIOS (Kotak India Opportunity Fund). This was meant for starting a trading account for the couple’s company… They did not wait for the [Hindenburg] report to come out before they took certain steps. So the trading account was started; money [from the family fund] was given by them,” Mr Jethmalani said.

“Prima facie, a bulk of the money earned out of this – $25 million – went to the Kingdons. That doesn’t seem to be the entire figure. More study is needed. SEBI may need to put more questions to Hindenburg. We don’t know the entire size of the cake, but a portion of it was to go to Hindenburg. So, Hindenburg was the researcher, and the entire trading op was the couple’s fund,” he said.

On Kotak’s role, Mr Jethmalani said the Indian bank certainly knew this was a short sell, bear-hammering transaction.

“Before the report was even made public, they had already taken short positions in Adani shares. Kotak certainly knew this was going to be a short sell trade in Adani shares. They covered the short sell after putting the margin money up, after the report was issued and shares fell. So that’s how short sellers, bear-hammers make their money,” Mr Jethmalani told NDTV.

“Hindenburg seems to be taking an arm’s length position on the couple and their fund. Whoever among them approached Kotak Mahindra Investments Limited [KIOS was the special purpose vehicle], what we do know is that Kotak was the one who knew who were involved. Hindenburg seems to have said ‘we’re only the researcher for [studying] Adani companies and we were supposed to get a cut’. So they also knew it was a short sell operation. But only Kotak knew who the investors were,” the senior lawyer said.

He said the Chinese-American businesswoman Anla Cheng is an extremely controversial person even in the United States. She ran SupChina [later renamed to The China Project], which was pro-China and promoted Chinese interests.

“An insider – this is where one got all the information from – Shannon Van Sant, ex employee of Cheng’s company, in her sworn statement said Cheng was subverting US interests and promoting China’s strategic interests. She found the entire operation to be extremely fishy, a hub of Chinese spies,” Mr Jethmalani said.

After the US Congress took up the matter, SupChina morphed into another company called ‘The China Project’, he said, adding because of the heat it faced from the US legislature for a thorough investigation into all its operations, The China Project announced publicly they are shutting it down.

New Delhi:

In a stunning claim that he has called a “smoking gun”, senior lawyer Mahesh Jethmalani has alleged that a businessman with Chinese links had commissioned the report by short-seller Hindenburg Research which led to shares of Adani Group companies taking a hit.

Earlier this week, the Securities and Exchange Board of India (SEBI) had said that foreign portfolio investor Kingdon Capital Management LLC and its entities aided Hindenburg in indirectly participating in Adani Enterprises Ltd. An investigation by the markets regulator also exposed that Kotak Mahindra and Hindenburg conspired together to take short positions in Adani shares.

In a lengthy post on X, Mr Jethmalani said Mark Kingdon, the American businessman behind Kingdon Capital Management LLC, had hired Hindenburg to prepare a report on the Adani Group. Mr Kingdon also approached Kotak’s international investment arm Kotak Mahindra Investments Limited (KMIL) to set up an offshore fund as well as offshore accounts to trade in Adani shares. This led to the creation of the Kotak India Opportunity Fund (KIOF). 

This fund allegedly took short positions in shares of Adani Group Companies through the Mauritius route before the Hindenburg report was made public and nearly $ 40 million for this was given by the Kingdon Master Fund. 

The smoking gun referred to by the senior lawyer was his revelation that Mr Kingdon’s wife Anla Cheng, a Chinese-American who has a large shareholding in the Kingdon Master Fund, is a lobbyist for Chinese interests in the United States. 

“She was the CEO of #SupChina a pro-China media corporate initiative which morphed into an entity called The China Project after a whistleblower accused SupChina of news subversion in China’s interest in a sworn statement before the US Congress,” the lawyer wrote. 

“#TheChinaProject shut down after calls for an investigation into its subversive activities by some US senators including having links with the Chinese Communist Party. The latter clearly has a bone to pick with the Adani group,” he added.

Mr Jethmalani suggested that the actions of Ms Cheng and Mr Kingdon were prompted by the Adani Group thwarting Chinese interests in several parts of the globe, including outbidding Chinese players for the Haifa Port in Israel and for coal projects near Sri Lanka’s Jaffna. 

Key Questions

Having laid out his points, Mr Jethmalani posed three major questions. 

“Who introduced the Kingdons to KMIL, what due diligence was conducted by KMIL regarding the Kingdons and did it participate in the short sell as a principal,” he asked.

The second question was whether all the Indian people, organisations and entities who helped Hindenburg knew about the short-selling plan and whether they benefited from it. Mr Jethmalani specifically mentioned politicians, in an apparent dig at the opposition, which has used the Adani-Hindenburg issue to target the group and the government on several occasions.

The lawyer also asked whether these people and entities knew about the Chinese link. 

‘Misrepresentations’

SEBI, in its show cause notice to Hindenburg Research LLC said the organisation’s report contained misrepresentations and inaccurate statements which built a convenient narrative through selective disclosures and catchy headlines to cause panic in Adani share prices, thereby deflating the prices of the Adani group stocks. 

Hindenburg has claimed that it did not provide research notice to Kingdon before sharing the draft report and Kingdon did not share the trading notice with Hindenburg before the report was shared publicly through mass email.

A Kotak Mahindra International Ltd spokesperson in a statement 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.”

“KMIL has also received a confirmation and declaration from the Fund’s investor that its investments were made as a principal and not on behalf of any other person,” the spokesperson stated.

(Disclaimer: New Delhi Television is a subsidiary of AMG Media Networks Limited, an Adani Group Company.)

New Delhi:

Markets regulator Securities and Exchange Board of India (SEBI) has issued a show cause 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. leading up to Hindenburg Report and thereafter. 

The regulator has alleged that Hindenburg and Anderson have violated regulations under the SEBI Act, SEBI’s Prevention of Fraudulent and Unfair Trade Practices regulations, and SEBI’s Code of Conduct for Research Analyst regulations.

While FPI Kingdon has allegedly violated the SEBI Act, SEBI’s Prevention of Fraudulent and Unfair Trade Practices regulations, and SEBI’s Code of Conduct for Foreign Portfolio Investors.

The 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 clearly pertained to listed entities in India. 

The regulator said that Kingdon aided Hindenburg to indirectly participate in Adani Enterprises by collaborating with the short seller to trade in the company’s futures in the Indian derivatives market and shared profits with the research firm.

Hindenburg continues to defend its January 2023 report.