Hindenburg Research released a report accusing Adani Group of stock manipulation and accounting fraud in January 2023.
Kotak Mahindra Bank is entangled in the controversy as it was allegedly involved in a profit-sharing deal with a Cayman Islands investor that took short futures positions in Adani’s flagship stock.
SEBI launched an investigation into Hindenburg Research, alleging that it made inaccurate statements meant to mislead readers.
SEBI suspects that Kotak Mahindra Bank may have had access to non-public information related to Hindenburg’s report and its release.
The report led to significant losses for the Adani Group, with over $100 billion being wiped off the value of its companies.
In January 2023, Hindenburg Research, a US-based short-seller firm, released a damaging report accusing India's Adani Group of stock manipulation and accounting fraud. The report led to significant losses for the Adani Group and sparked investigations by various regulatory bodies. However, the situation took an unexpected turn when Hindenburg Research itself came under scrutiny from India's Securities and Exchange Board (SEBI).
According to reports, SEBI suspects that Hindenburg Research colluded with a foreign investor to use non-public information for shorting Adani Group stocks. The regulator also alleges that Kotak Mahindra Bank, one of India's largest banks and brokerage firms, created and oversaw an offshore fund structure used by the investor to bet against Adani's shares. Hindenburg Research denies these allegations.
The controversy has escalated into a messy conflict between Hindenburg Research and SEBI, with the short-seller accusing the regulator of treating local corporate bigwigs with kid gloves and focusing on the messenger rather than the message. The situation remains unresolved, casting doubts on India's regulatory landscape and raising questions about transparency in financial markets.
Here are some key facts from various sources:
Hindenburg Research released a report accusing Adani Group of stock manipulation and accounting fraud in January 2023.
The report led to significant losses for the Adani Group, with over $100 billion being wiped off the value of its companies.
SEBI launched an investigation into the matter and issued a show cause notice to Hindenburg Research, alleging that it made inaccurate statements meant to mislead readers.
Kotak Mahindra Bank is entangled in the controversy as it was allegedly involved in a profit-sharing deal with a Cayman Islands investor that took short futures positions in Adani's flagship stock.
SEBI suspects that Kotak Mahindra Bank may have had access to non-public information related to Hindenburg's report and its release, which would be a violation of fund regulations and code of conduct if proven true.
The situation remains unresolved, with Hindenburg Research denying the allegations and SEBI continuing its investigation. The controversy has raised concerns about transparency in financial markets and the role of regulatory bodies in protecting investors.
An activist short-seller, Hindenburg Research, released a damaging report against the Adani Group.
A Mauritius-based investment vehicle was also implicated.
A broker tied to a big Indian bank played a role in the situation.
Accuracy
The report led to significant bets against the Adani Group in the markets.
Adani has largely recovered from the impact of the report and Hindenburg made just over $4 million in gross revenue from short positions on Adani’s companies and about $31,000 from shorting Adani US bonds.
Hindenburg Research accused Gautam Adani of fraud going back decades in a report published in January 2023
Adani has largely recovered from the impact of the report and Hindenburg made just over $4 million in gross revenue from short positions on Adani’s companies and about $31,000 from shorting Adani US bonds
SEBI launched a probe into the group after the Hindenburg report but India’s top court ordered it to wrap up the investigation quickly and no further probes were needed
Accuracy
Hindenburg Research made surprisingly little money from short positions on Adani’s companies and about $31,000 from shorting Adani US bonds
SEBI suspects that Kotak may have had access to non-public information related to Hindenburg’s report and its release
Hindenburg alleges that SEBI's actions seem to be aimed at pursuing those who expose practices like stock manipulation and accounting fraud, rather than the practices themselves
Deception
(30%)
The article does not clearly state the author's opinions or assertions, and it includes quotes from Hindenburg Research. The article also reports on the allegations made by Hindenburg against Gautam Adani and his response to those allegations. However, there is an example of selective reporting in the form of mentioning that Adani's personal fortune collapsed by more than $80 billion without linking to peer-reviewed studies or factual evidence supporting this claim.
The impact was immediate and explosive: over $100 billion was wiped off the value of his companies.
Fallacies
(85%)
The article contains a dichotomous depiction of Hindenburg Research's report as either accurate and revealing fraud or as an attempt to mislead readers. Additionally, there is an appeal to authority with the mention of SEBI's allegations against Hindenburg. Inflammatory rhetoric is also present in the quote from Hindenburg claiming that SEBI has neglected its responsibility.
The<dummy00022>, Adani — who has denied any wrongdoing — has largely recovered from the broadside and the tiny US short seller has revealed how much it made betting against the Indian billionaire: just over $4 million.
In its blistering report last year, Hindenburg had accused the Adani Group of “brazen stock manipulation” and questioned the “sky-high” valuations of the ports-to-power conglomerate’s firms.
Hindenburg said in its statement that it made just $4.1 million in gross revenue through gains related to Adani short positions from a relationship with unnamed investor and about “$31,000 through our own short of Adani US bonds.”
Hindenburg’s report caused one of the most stunning upheavals in India’s corporate history. The Adani Group immediately denounced the accusations as “baseless” and “malicious,” but failed to halt the staggering stock market meltdown that followed.
But the group has made a remarkable comeback since then. Shares in most of Adani’s 10 listed firms have rallied this year, and the infrastructure tycoon was briefly back as Asia’s richest man. He is currently in second spot, behind fellow countryman Mukesh Ambani, according to Bloomberg’s Billionaire Index.
The Adani story has escalated into a messy conflict between Hindenburg, an American researcher and short-seller, and SEBI, the Indian capital market regulator.
Hindenburg accused SEBI of treating local corporate bigwigs with kid gloves and focusing on the messenger rather than the message in its show cause notice.
Kotak, an Indian bank, is entangled in the controversy as it was allegedly involved in a profit-sharing deal with Kingdon, a Cayman Islands investor that took short futures positions in Adani’s flagship stock.
SEBI suspects that Kotak may have had access to non-public information related to Hindenburg’s report and its release, which would be a violation of fund regulations and code of conduct if proven true.
Accuracy
SEBI suspects that Kotak may have had access to non-public information (NPI) related to Hindenburg’s report and its release, which would be a violation of fund regulations and code of conduct if proven true.
India’s securities regulator, SEBI, has alleged that Hindenburg Research colluded with Kingdon Capital Management to use nonpublic information for a short bet against Adani Group last year.
Deception
(30%)
The author makes editorializing statements and uses emotional manipulation by implying that SEBI is overbearing and Hindenburg is a Wall Street player that thrives on blemishes of others. The article also engages in selective reporting by focusing on the conflict between Hindenburg and SEBI, while ignoring the allegations of price manipulation and accounting fraud made against Adani in the report. Additionally, there is no disclosure of sources.
An unhindered Wall Street player that thrives on blemishes of others and is seemingly answerable to no one, has cast aspersions on an overbearing regulator which is used to dealing with timid fund managers and brokers.
However, Hindenburg’s surprise counterattack could make the closure of the Adani saga messier than what SEBI had bargained for.
, the latter is aware that it can never lay its hands on the minutes of SEBI meetings.
Fallacies
(75%)
The author makes several appeals to authority by mentioning SEBI's actions and Hindenburg's accusations towards the regulator. The author also uses inflammatory rhetoric by describing Hindenburg as a 'scurrilous story that was slowly fizzling out,' an 'unhindered Wall Street player that thrives on blemishes of others,' and a 'messenger' instead of focusing on the message itself. Additionally, the author makes assumptions about SEBI's intentions and motivations without providing concrete evidence.
An unhindered Wall Street player that thrives on blemishes of others, has cast aspersions on an overbearing regulator which is used to dealing with timid fund managers and brokers.
, the latter is aware that it can never lay its hands on the minutes of SEBI meetings.
Hindenburg, emboldened by the belief that it is beyond SEBI’s jurisdiction, did what Indian regulated entities would never dare to do: it posted the show cause notice from SEBI while mincing no words in accusing the regulator of treating local corporate biggies with kid gloves, training its guns on the messenger instead of going to the bottom of the message, and even threatening to invoke the RTI law to fish out details of what transpired in the multiple meetings between the capital market regulator and Adani officials.
These are ‘non-public information’ (NPI) as opposed to ‘unpublished price sensitive information’ (UPSI), a more familiar term in equity market stories on price manipulation and insider trading.
Bias
(5%)
The author uses language that depicts SEBI as an overbearing regulator and Hindenburg as a Wall Street player that thrives on blemishes of others. The author also implies that SEBI may have treated Adani with kid gloves and threatened to invoke the RTI law to fish out details of what transpired in meetings between the capital market regulator and Adani officials.
An unhindered Wall Street player that thrives on blemishes of others and is seemingly answerable to no one, has cast aspersions on an overbearing regulator which is used to dealing with timid fund managers and brokers.
Hindenburg, emboldened by the belief that it is beyond SEBI’s jurisdiction, did what Indian regulated entities would never dare to do: it posted the show cause notice from SEBI while mincing no words in accusing the regulator of treating local corporate biggies with kid gloves, training its guns on the messenger instead of going to the bottom of the message, and even threatening to invoke the RTI law to fish out details of what transpired in the multiple meetings between the capital market regulator and Adani officials.
India's securities regulator, SEBI, has alleged that Hindenburg Research colluded with Kingdon Capital Management to use nonpublic information for a short bet against Adani Group last year.
SEBI received information from or through the US Securities and Exchange Commission (SEC) during its investigation.
Hindenburg Research made $4.1m in gross revenue through gains related to Adani shorts, but only $31,000 came from its short position of Adani’s US bonds.
Kotak Mahindra Bank created and oversaw an offshore fund structure used by its investor partner to bet against Adani’s shares.
Accuracy
No Contradictions at Time
Of
Publication
Deception
(30%)
Al Jazeera's article reports on allegations made by India's securities regulator (SEBI) against Hindenburg Research for colluding with another entity to help set up a short bet against Adani Group. The article presents the allegations as facts without providing any evidence or context to support this claim. This is an example of selective reporting, as the article only reports details that support SEBI's position and ignores any information that may contradict it. Additionally, the article uses emotional manipulation by implying that SEBI has neglected its responsibility and is protecting those perpetrating fraud instead of protecting investors. Lastly, the article makes a statement about Hindenburg's revenue from its short position on Adani without providing any context or evidence to support this claim.
India’s securities regulator has alleged Hindenburg colluded with another entity to help it short Adani Group.
Hindenburg made $4.1m in gross revenue through ‘gains related to Adani shorts from that investor relationship’.
SEBI said in the notice that it had received information from or through the US Securities and Exchange Commission (SEC) in the course of its investigation.
Fallacies
(85%)
Al Jazeera's article reports on allegations made by India's securities regulator (SEBI) against Hindenburg Research for colluding with another entity to help set up a short bet against Adani Group. The article also mentions that if these allegations are proven, it would breach the country's rules. However, Hindenburg has denied these allegations and called them 'nonsense'. This is an example of an Appeal to Authority fallacy as SEBI is presented as a reliable source making serious accusations against Hindenburg without providing any evidence or context for their claims. Additionally, there are several instances of Inflammatory Rhetoric used by Hindenburg in its statement, such as 'SEBI has neglected its responsibility' and 'doing more to protect those perpetrating fraud than to protect the investors being victimized by it'. These statements are not based on facts and serve only to inflame emotions.
]India’s securities regulator has alleged Hindenburg colluded with another entity[
SEBI said in the notice that it had received information from or through the US Securities and Exchange Commission (SEC) in the course of its investigation.
Hindenburg said a Mauritius-registered unit of India’s Kotak Mahindra Bank created and oversaw an offshore fund structure used by its 'Investor partner' to bet against Adani's shares.
SEBI alleges Hindenburg colluded with its client Kingdon Capital Management by providing a draft of its report on Adani Group before it was released publicly.
US-based short-seller Hindenburg Research received a show cause notice from SEBI for trading in shares of Adani Enterprises Ltd immediately prior and post the release of its report on Gautam Adani-led Adani Group in January 2023.
Hindenburg Research alleges that SEBI's actions seem to be aimed at pursuing those who expose practices like stock manipulation and accounting fraud, rather than the practices themselves.
SEBI claims that a foreign portfolio investor, K India Opportunities Fund Ltd, opened a trading account and started trading in Adani Enterprises Ltd shares few days before the release of Hindenburg’s report and then squared off its entire short position, making a profit of Rs 183.24 crore.
Hindenburg Research claims that SEBI’s notice conspicuously failed to name Kotak Bank, one of India’s largest banks and brokerage firms, which created and oversaw the offshore fund structure used by its investor partner to bet against Adani.
Accuracy
No Contradictions at Time
Of
Publication
Deception
(100%)
None Found At Time Of
Publication
Fallacies
(85%)
The author makes an appeal to authority by mentioning the name of SEBI multiple times and implying that their actions are suspicious. The author also uses inflammatory rhetoric by accusing SEBI of 'surreptitious aid' to Adani and protecting powerful Indian businessmen from scrutiny.
“Instead, SEBI seems more interested in pursuing those who expose such practices.”
“Sebi has alleged the report was used in collusion to make profit.”
“We suspect SEBI’s lack of mention of Kotak or any other Kotak board member may be meant to protect yet another powerful Indian businessman from the prospect of scrutiny, a role SEBI seems to embrace.”
Bias
(80%)
The author shows religious bias by repeatedly mentioning the name 'Kotak' and implying that SEBI is protecting Uday Kotak, who is Hindu. The author also implies that SEBI's actions are in line with other elements of the Indian government which have sought to arrest journalists for writing critical articles about Adani, suggesting a political bias against freedom of speech.
Instead, SEBI seems more interested in pursuing those who expose such practices. This stance is broadly in line with the actions of other elements of Indian government which have sought to arrest 4 journalists for writing critical articles about Adani and expelled members of parliament who were critical of Adani.
It further said, ‘We suspect SEBI’s lack of mention of Kotak or any other Kotak board member may be meant to protect yet another powerful Indian businessman from the prospect of scrutiny, a role SEBI seems to embrace.’
