Adani Group, SEBI Chief, Industry Leaders Slam "Discredited" Hindenburg

The Adani Group today refuted the latest allegations by Hindenburg Research as "malicious, mischievous and manipulative selections of publicly available information" to arrive at "predetermined conclusions for personal profiteering with wanton disregard for facts and the law".

In a stock exchange filing, the Adani Group completely rejected these allegations "which are a recycling of discredited claims that have been thoroughly investigated, proven to be baseless and already dismissed by the Honourable Supreme Court in January 2024".

"For a discredited short-seller under the scanner for several violations of Indian securities laws, Hindenburg's allegations are no more than red herrings thrown by a desperate entity with total contempt for Indian laws," the Adani Group said.

SEBI Chairperson's Response

The Securities and Exchange Board of India (SEBI) Chairperson Madhabi Puri Buch and her husband Dhaval Buch strongly denied the allegations levelled by Hindenburg against them, calling it a "character assassination attempt" because an enforcement action and show cause notice was issued to the Nate Anderson-led US-based short seller last month.

"It is unfortunate that Hindenburg Research against whom SEBI has taken an enforcement action and issued a show cause notice has chosen to attempt character assassination in response to the same," Madhabi Buch and Dhaval Buch said in a joint statement.

Show Cause Notice

The capital markets regulator last month had said Hindenburg and Nate Anderson violated regulations under SEBI's prevention of fraudulent and unfair trade practices, and SEBI's code of conduct for research analysts.

Short-sellers like Hindenburg could find themselves in hot water, as even the US market regulator, the Securities and Exchanges Commission (SEC), has been tightening its grip.

Mutual Funds Body Says SEBI Chief Being Targeted

The Association of Mutual Funds in India (AMFI) said Hindenburg is trying to create a trust deficit in the market ecosystem and undermine the good work done by Madhabi Buch. "Recent external comments on the regulator's chairperson not only attempt to undermine Madhabi Buch's contribution to the Indian capital market, but it also undermines our country's economic progress, and creating a trust deficit in the market ecosystem must be seen for what they truly are - attempts to create sensation by connecting random events done in the past," the industry having nearly Rs 65 lakh crore in asset under management said.

AMFI warned that if the allegations are left unchecked, they can create unnecessary hurdles in the path of the world's fastest-growing economy. Hindenburg's claims lack context and understanding of the Indian regulatory environment, it said, adding they also "seek to malign the hard-earned achievements of our nation".

Investment Referred To By Hindenburg Made Before Madhabi Buch Joined SEBI

The investment in the fund referred to in the Hindenburg report was made in 2015 when Madhabi Buch and Dhaval Buch were both private citizens living in Singapore and almost two years before Madhabi joined SEBI, even as a Whole Time Member, the couple said in a statement.

"The decision to invest in this fund was because the Chief Investment Officer, Anil Ahuja, is Dhaval's childhood friend from school and IIT Delhi and, being an ex-employee of Citibank, J.P. Morgan and 3i Group plc, had many decades of a strong investing career. The fact that these were the drivers of the investment decision is borne out by the fact that when, in 2018, Ahuja, left his position as CIO of the fund, we redeemed the investment in that fund," the statement said.

"As confirmed by Anil Ahuja, at no point in time did the fund invest in any bond, equity, or derivative of any Adani group company," the statement said.

More Reactions

Senior lawyer Mahesh Jethmalani slammed Hindenburg's latest claims as "pathetic damp squib". "The announcement prior to its alleged big revelation itself reveals its motive: to destabilise India's stock markets. The pre-publicity ill behoves a reputed 'research analyst'," he said. "There being nothing new against the Adani group," the US short seller is targeting the SEBI chairperson, Mr Jethmalani added.

Politicians and financial experts have also rejected the report. While former union minister Rajeev Chandrasekhar alleged a global attempt at destabilising the Indian economy, IMF Executive Director KV Subramanian backed the SEBI chief's integrity. Mr Chandrasekhar called the report an attack on the market regulator and accused the Congress of being in a "partnership" with Hindenburg.

Former Infosys CEO Mohandas Pai said the allegations against the SEBI chief are rubbish and a "character assassination by a Vulture Fund." "Rubbish allegations aimed at sensationalism. There was a Supreme Court-monitored investigation overseen by an eminent panel and when the Vulture Fund was fully exposed, it threw mud," Mr Pai said.

Senior BJP leader Sudhanshu Trivedi too called the Hindenburg report a "conspiracy to create imbalance in India".

Deepak Shenoy, the founder-CEO of Capitalmind, a portfolio management service, said the Hindenburg report has gone into "sensationalism" and there's "hardly any substance".

KV Subramanian, former chief economic adviser, vouched for the "unimpeachable integrity" of Madhabi Buch and said the report lacked intellectual rigour. "I've personally known SEBI chairperson Madhabi for about two decades. Given her unimpeachable integrity and her intellectual prowess, I'm sure she will shred to smithereens this Hindenburg hit job," said Mr Subramanian, who is now an Executive Director with the International Monetary Fund.