The Hindenburg Research 106-page report against Adani that came out in January of 2023 made many waves after its release.

The report by the US-based investment research firm was titled “Adani Group: How The World’s 3rd Richest Man Is Pulling The Largest Con In Corporate History” and made serious claims about stock manipulation, debt levels and the use of tax havens among various other things brought about a loss of Rs. 48,000 in market value for the Adani Group in a single move.

Since then, many developments have happened concerning the allegations made, with the Securities and Exchange Board of India (SEBI) conducting an investigation, and the Supreme Court, on January 3, 2024, refusing a SIT (Special Investigation Team) probe into Adani-Hindenburg case.

Now Hindenburg Research has come out against a Show Cause notice sent by SEBI calling it baseless and nonsense and an attempt to silence their voice against the severe allegations they have made against the Adani Group.

One of the rumours against Hindenburg was that they made several millions of dollars from their report, however, they revealed, that their revenue through gains made by shorting of Adani securities by its client was only $4.1 million and around $31,000 from the firm’s only short position on Adani US bonds. This is something SEBI’s Show Cause notice confirmed too.

How Much Money Did Hindenburg Research Make?

On July 1st, Hindenburg Research posted a blog on their site titled “Adani Update – Our Response To India’s Securities Regulator SEBI” in which they stated “We have been aware that Indian securities regulator SEBI has been grappling with how they are going to respond to us, a U.S.- based research firm with no presence or operations in India, after we presented overwhelming evidence in January 2023 of why we believed Indian conglomerate Adani Group was operating “the largest con in corporate history”.”

They further wrote about how they received an email from SEBI on 27th June 2024 “alerting us that SEBI had flagged its own message to us that we never received as an apparent security risk.” The next day they received a ‘Show Cause’ notice letter as an email where SEBI alleged Hindenburg Research of violating Indian regulations.

The blog called the notice “nonsense, concocted to serve a pre-ordained purpose: an attempt to silence and intimidate those who expose corruption and fraud perpetrated by the most powerful individuals in India.”

Read More: Supreme Court Refuses SIT Probe Into Adani-Hindenburg Row, Here’s Everything You Need To Know About This

As per the blog SEBI sent them a 46-page Show Cause Notice and questioned their relationship with “an investor that expressed a short position in Adani.”

They further stated, “Strategic media leaks that appear to stem from SEBI and the ED previously implied that we generated a massive financial windfall from our Adani shorts.”

However, Hindenburg clarified the rumour that they had worked with several firms to short Adani and thus made hundreds of millions of dollars stating that “Prior media have cited sources close to SEBI and the ED who implied that we had 12 or even 16 investor partners in our Adani work.

Collectively, according to the sources, those parties generated hundreds of millions in gains. The sensational headlines and strategic ‘leaks’ suggested that we clocked a massive windfall from our report.”

Hindenburg stated that they only had one investor for their thesis and made around $4 million in gains from the Adani short. They wrote “We only had one investor relationship in our Adani thesis, as is customary for our approach and as we have discussed in multiple public interviews.

We have made ~$4.1 million in gross revenue through gains related to Adani shorts from that investor relationship. We made just U.S.~ $31,000 through our own short of Adani U.S. bonds held into the report. (It was a tiny position)

Net of legal and research expenses (including time, salaries/compensation, and costs for a 2-year global investigation) we may come out ahead of breakeven on our Adani short.”

The blog stated, “But, to date, our research on Adani is by far the work we are most proud of.”

Further writing “The incentives are clear: The gains from fraudulent activities outweigh the small risks of a potential ‘slap on the wrist’ fine from regulators. And based on the hundreds of tips and leads we received following the Adani report, Adani is by no means the only lurking and ongoing issue Sebi has failed to address.”

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Feature image designed by Saudamini Seth

Sources: Bloomberg, The Hindu Businessline, The Economic Times

Find the blogger: @chirali_08

This post is tagged under: adani group controversial report, adani group Hindenburg Research, adani group report, Gautam Adani, gautam Adani Hindenburg Research, gautam Adani loss, gautam Adani report, Hindenburg Research, Hindenburg Research firm, Hinderberg Research adani, Nathan Anderson, Nathan Anderson Hindenburg Research, sebi, hindenburg sebi

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