On Saturday, Hindenburg Research released a new report alleging that the Securities and Exchange Board of India (SEBI) failed to act on claims made in its 2023 report against the Adani Group. The firm asserts that SEBI’s inaction is due to potential conflicts of interest involving SEBI’s chief, Madhabi Puri Buch, who allegedly has investments in offshore firms connected to the Adani conglomerate.
Details of the Allegations
According to Hindenburg Research, documents from whistleblowers reveal that Madhabi Buch and her husband, Dhaval Buch, have made investments in offshore funds in Bermuda and Mauritius. These investments date back to 2015 and are linked to entities that the Adani Group allegedly used for market manipulation.
Background on Hindenburg Research
Hindenburg Research, a US-based investment research firm founded by Nathan Anderson, specializes in forensic financial research. The firm is known for its short selling practice, wherein they predict declines in market prices of certain companies based on their investigations.
Company Profile
- Founder: Nathan Anderson
- Specialization: Forensic financial research, short selling
- Notable Reports: Nikola, Aphyria, Pershing Gold
- Recognition: ‘Top Short Seller’ at Activist Insight’s Investing Annual Review (2021, 2022)
- Named After: The Hindenburg disaster of 1937
Hindenburg’s Investigations
In January 2023, Hindenburg released a report alleging that the Adani Group orchestrated extensive stock manipulation and financial misconduct, causing a significant drop in their market valuation. The firm’s 2023 report led to over $100 billion in losses for the Adani Group.
Recent Developments
In June 2024, SEBI was accused by Hindenburg of sharing the report with a New York-based hedge fund manager, allowing trading based on this information. SEBI’s investigation into the Adani Group’s transactions has reportedly made limited progress.
Supreme Court’s Involvement
The Supreme Court ruled in January 2023 and July 2024 that it could not interfere in SEBI’s jurisdiction regarding the Adani investigation. According to Hindenburg, the court found SEBI’s investigation to be lacking.
SEBI’s Response and Denials
Hindenburg’s latest report claims that SEBI’s reluctance to act against the Adani Group might be due to Madhabi Buch’s investments. SEBI has denied any wrongdoing, and Madhabi Buch and her husband have released a joint statement rejecting the allegations, emphasizing that their finances are transparent and have been disclosed to SEBI.
Multiple-Choice Questions (MCQs):
- What is the primary allegation in Hindenburg Research’s latest report?
- A) SEBI’s chief has personal investments linked to the Adani Group.
- B) SEBI failed to investigate the Adani Group’s stock manipulation.
- C) Hindenburg Research did not release their report on time.
- D) Madhabi Buch and her husband are involved in insider trading.
- When did Hindenburg Research allege that Madhabi Buch and her husband made their offshore investments?
- A) 2020
- B) 2015
- C) 2017
- D) 2022
- What was the result of Hindenburg Research’s 2023 report on the Adani Group?
- A) It led to the dismissal of the Adani Group’s management.
- B) It caused over $100 billion in losses for the Adani Group.
- C) It resulted in the resignation of SEBI’s chief.
- D) It led to a major legal victory for the Adani Group.
- What does Hindenburg Research specialize in?
- A) Investment banking
- B) Forensic financial research and short selling
- C) Stock trading
- D) Market forecasting
- Which significant company investigation by Hindenburg Research led to a major settlement?
- A) Aphyria
- B) Nikola
- C) Pershing Gold
- D) FactSet Research Systems