US short seller Hindenburg Research, known for its allegations against the Adani Group concerning stock market manipulation and accounting fraud, announced on Tuesday that it has received a show cause notice from the Securities and Exchange Board of India or SEBI for alleged violations in placing bets on Adani stocks.
Hindenburg described the show cause notice as "nonsense" and claimed it was an attempt to "silence and intimidate" those exposing corruption and fraud by powerful individuals in India.
The New York-based firm reiterated that when it released its report alleging long-term stock manipulation and accounting fraud by the Adani group, it had disclosed its short position on Adani stocks.
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The firm also revealed that Kotak Bank had created and managed an offshore fund structure used by its "investor partner" to bet against the conglomerate, but added that it might "barely come out above breakeven" on the trade.
Without disclosing the name of the investor, Hindenburg said it made USD 4.1 million in gross revenue through "gains related to Adani shorts from that investor relationship" and just USD 31,000 through its short position of the conglomerate's US bonds.
Adani group has repeatedly denied all allegations.
"After 1.5 years Of investigation, SEBI identified zero factual inaccuracies with our Adani research. Instead, the regulator took issue with things like our use of the word 'scandal' when describing multiple prior instances of Adani promoters being charged with fraud by Indian regulators, and our quoting of an individual that alleged SEBI is corrupt and works 'hand in glove' with conglomerates like Adani to help it skirt regulations," it said.