July 2nd 2024.
Recently, the Securities and Exchange Board of India (SEBI) has taken action against Hindenburg Research, Nathan Anderson, and Mauritius-based foreign portfolio investor Mark Kingdon for alleged trading violations involving Adani Enterprises Ltd. This came after Hindenburg published a report that raised concerns about the company's practices.
In a lengthy 46-page notice, SEBI has accused Hindenburg and Anderson of violating regulations under the SEBI Act, as well as SEBI's Prevention of Fraudulent and Unfair Trade Practices and Code of Conduct for Research Analysts. Similarly, Kingdon has been accused of violating the SEBI Act, as well as SEBI's regulations for foreign portfolio investors.
According to the show-cause notice, SEBI has discovered that Hindenburg and the FPI entities had a misleading disclaimer stating that their report was only for evaluating securities traded outside of India. However, it appears that the report actually pertained to listed entities within India. This misleading information has raised concerns about the accuracy and credibility of the report.
Additionally, SEBI has found evidence that Kingdon collaborated with Hindenburg to indirectly participate in Adani Enterprises by trading in the company's futures in the Indian derivatives market. This collusion between the short seller and the FPI resulted in shared profits for both parties.
Despite the actions taken by SEBI, Hindenburg stands by their report which was published in January 2023. It remains to be seen how this situation will unfold and what consequences these entities will face for their alleged violations.
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