For trading violations in the Adani Enterprises Ltd. scrip that occurred prior to the Hindenburg report and thereafter, the Securities and Exchange Board of India (SEBI) issued a show-cause notice to Hindenburg Research, Nathan Anderson, and the entities of foreign portfolio investor (FPI) Mark Kingdon, based in Mauritius.
The markets regulator has claimed that Hindenburg and Anderson violated the SEBI Act, the SEBI Code of Conduct for Research Analysts, and the Prevention of Fraudulent and Unfair Trade Practices regulations in a 46-page show-cause letter.
According to the show-cause notice, FPI Kingdon is accused of breaking the SEBI Act, the SEBI Code of Conduct for Foreign Portfolio Investors, and the SEBI Regulations on the Prevention of Fraudulent and Unfair Trade Practices.
The markets regulator noted that, despite the report’s obvious reference to listed companies in India, Hindenburg and the FPI entities made a false statement claiming that it was only intended for the valuation of securities traded outside of the country.
The regulator alleged that by working with the short seller to trade the company’s futures on the Indian derivatives market and splitting earnings with the research firm, Kingdon helped Hindenburg indirectly engage in Adani Enterprises.
Hindenburg is still standing by the report it released in January 2023.
