The Hindenburg Whodunit: Sebi puts FPIs in the dock

The capital markets regulator has summoned several global funds invested in Adani Group stocks to address accusations of improper disclosures and market manipulation.

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Gautam Adani

Despite fluctuations, Adani stocks have mostly recovered, allowing the group to resume investments and fundraising activities.

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The Adani Hindenburg Whodunit isn’t over. India's market regulator, Securities and Exchange Board of India(Sebi) has called for action to be taken against foreign portfolio investors (PFI) for market manipulations and not making mandatory disclosures. 

According to a Bloomberg report, one FPI has been charged with shorting Adani stocks “after getting wind” of the Hindenburg report — which itself shorted Adani stocks, causing its market cap to tumble.

The capital markets regulator has summoned several global funds invested in Adani Group stocks to address accusations of improper disclosures and market manipulation.

Sebi is investigating two groups of foreign portfolio investors (FPI): one accused of shorting Adani stocks ahead of a negative report by Hindenburg Research, and another suspected of having ties to Adani Group founders and heavily investing in Adani stocks. 

The short seller report in question, released by US-based Hindenburg Research, swiftly eroded over $100 billion in market value for the Adani Group following its publication in January 2023.

The regulator is seeking explanations from these funds, while the conglomerate denies any association with them. 

Sebi's final orders in these probes are expected after hearing the funds' responses, potentially concluding the Hindenburg episode. The Indian markets regulator has accused the funds of failing to disclose information about their ultimate beneficial owners and breaching investment limits in Adani Group entities. 

Some investors are reportedly considering settlements with Sebi. 

The probe, expanded to include market manipulation allegations, follows Hindenburg's claims of fraudulent stock price inflation by the Adani Group

Despite fluctuations, Adani stocks have mostly recovered, allowing the group to resume investments and fundraising activities.

Sebi's conclusions from these investigations will effectively mark the end of the Hindenburg episode, at least within India. The Supreme Court in January had declared that there would be no further probes into this saga once the regulator concludes its investigation.

Sebi Securities and Exchange Board of India Gautam Adani Hindenburg research Hindenburg Adani Group