Mint Explainer: Hindenburg's response to Sebi notice following report on Adani

livemint.com:

Mint looks at the key aspects of the latest Hindenburg post: The show-cause notice dated 26 June 2024 was sent to Hindenburg and Kingdon Capital Management, the only investor with which the US short seller shared the damning report on the Adani Group before publishing it. The notice details how Hindenburg violated some regulations, including inadequate disclosures on how it traded and profited. It estimates Hindenburg made $14.7 million from taking a short position in Adani.

The 46-page notice, as shared by Hindenburg, states that the short seller's report made some inaccurate statements to mislead readers and create panic among investors. Hindenburg said on 1 July that the notice was "nonsense, concocted to serve a pre-ordained purpose: an attempt to silence and intimidate those who expose corruption and fraud perpetrated by the most powerful individuals in India." Hindenburg concluded that Sebi's action was akin to shooting the messenger as the market regulator "seems more interested in pursuing those who expose such practices." US hedge fund Kingdon Capital Management was the investor that partnered with Hindenburg. Financier Mark Kingdon set up his firm in 1983.

According to filings with the US market regulator, Kingdon Capital Management had $640 million in assets under management at the end of March 2024. According to Sebi, Kingdon Capital Management was the only investor with which Hindenburg shared the report before it was published. Kingdon Capital Management made a profit of $22.11 million by trading in futures of Adani Enterprises Ltd shares.