SEBI's Show Cause Notice to Hindenburg: Early Disclosure and Market Impact

SEBI's Show Cause Notice to Hindenburg: Early Disclosure and Market Impact

The Securities and Exchange Board of India has served a 46 page show cause notice on Hindenburg.

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Hindenburg did a blooper in the Adani report, said SEBI, and revealed that it shared the copy of the report with the client two months ago. Here there is another disclosure made in the American short seller, Hindenburg case. Before releasing the report to the public, the short seller from America had forwarded the report against Adani to his client. 

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By the latest data, Hindenburg had forwarded a copy of the report to his client two months before the public release of the Adani report. The Indian market regulator, the Securities Exchange Board of India or SEBI explained that, Motley had forwarded a softer copy of his report on the Adani group to New York resident hedge fund manager Mark Kingdon two months prior to its release. 

This benefitted from the movements in the shares of the group’s companies.SEBI said this in a 46-page notice to the applicants during the public interest litigation in the Supreme Court of India.

Also read :SEBI's Show Cause Notice to Hindenburg: Early Disclosure and Market Impact

While responding to Hindenburg Research, the Securities and Exchange Board of India has served a 46 page show cause notice on Hindenburg, in which it says, “It was observed that around November 30, 2022, Hindenburg shared a draft of the Hindenburg Report on Adani Group, which was substantially similar to the later published Hindenburg Report, exclusively with its client, Kingdon Capital Management, pursuant to a Research Agreement dated May ”

Broker earned was at $150 billion after the releasing of the report.

Also mentioned in the show cause notice of the foreign listed entities, it described how American short sellers, New York hedge funds, and a broker affiliated with Kotak Mahindra Bank capitalised on the decline of the market capitalisation of 10 listed companies of the Adani Group below US$150 billion after the release of the report. The market regulator’s notice has fragments of time-stamped chats of the hedge fund’s employee with some of the KMIL traders concerned with the sale of future contracts in AEL.

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From the letter of SEBI, Mark which is a controlling shareholder in KMIL’s K-India Opportunities Fund Limited had agreed to split, 30 per cent of the profit from trading in securities in exchange of the hindenburg report. This profit sharing was then held to 25% because trading through K-India Fund to take additional time and effort.