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Adani-Hindenburg Dispute
Context
The ongoing conflict between Hindenburg Research and the Adani Group has escalated with new allegations. This dispute has significant implications for market regulation and corporate governance in India.
Who is Adani and Hindenburg?
- Adani Group: Founded by Gautam Adani, who began as a commodities trader and grew to become Asia's richest person. The Adani Group has businesses in ports, power, airports, mining, and more.
- Hindenburg Research: A U.S.-based forensic financial research firm founded by Nathan Anderson in 2017. Known for investigating corporate misconduct and short-selling. One of their key practices is short selling, wherein their reports on certain companies inform their position in predicting whether the market prices of certain companies will fall.
What has happened?
- Hindenburg Report: In January 2023, Hindenburg Research accused Adani Group of using tax havens and having high debt levels. This led to a massive $150 billion drop in Adani’s stock prices.
- SEBI is investigating the Adani Group as a result of the Hindenburg report. Hindenburg continues to push for scrutiny of both Adani and the regulators involved.
- Notably, in January 2023 and in a review in July 2024, the Supreme Court ruled that they could not interfere in the SEBI's jurisdiction to investigate claims against Adani made in the Hindenburg report.
- Adani’s Response: Adani Group dismissed the allegations as baseless and speculative.
What are Hindenburg’s latest accusations?
- Conflict of Interest: Hindenburg has recently alleged that Madhabi Puri Buch, the chairperson of India’s market regulator SEBI, and her husband had investments in offshore funds linked to Adani Group.
- Specifics: Hindenburg claims that the Buchs invested in a Bermuda-based fund that was connected to Adani Group. They are accusing Buch of having a potential conflict of interest due to this past investment, which they argue may explain the slow regulatory response to the Adani allegations.
The allegations add pressure on SEBI and raise questions about its impartiality in regulating the Adani Group. It highlights the complex interplay between corporate accountability, market regulation, and the potential conflicts of interest that can affect oversight.
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Fact Box: What is short-selling?
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