US-based investment research firm Hindenburg Research, which had recently published a report alleging stock manipulation and accounting fraud by Adani Group, is itself under criminal probe for short-selling and collusion.
In its recent report on Adani conglomerate, Hindenburg Research said “We have uncovered evidence of brazen accounting fraud, stock manipulation and money laundering at Adani, taking place over the course of decades. Adani has pulled off this gargantuan feat with the help of enablers in government and a cottage industry of international companies that facilitate these activities,”.
The Hindenburg Research report came just two days before Adani Enterprises’ Follow-on Public Offer (FPO) of ₹20,000 crore, the biggest ever FPO in India, which is scheduled to open for subscription on 27 January 2023.
After the news of the report hit the headlines, Adani’s shares fell by up to 8% dampening the sentiments of the investors.
Adani group has rubbished the report terming it ‘malafide’ and is exploring legal action against Hindenburg.
“The maliciously mischievous, unresearched report published by Hindenburg Research on 24 Jan 2023 has adversely affected the Adani Group, our shareholders and investors.”, Jatin Jalundhwala, Group Head – Legal, Adani Group, said in a media statement.
‘Short-Seller’ Hindenburg
Hindenburg Research LLC is a firm based in New York City which has been called as an organization that specialized in ‘short-selling’.
Short-sellers are those investors who bet against a certain stock and borrow them from a party, ‘short’ them and later sell it at other exchanges to buy them back at a lower price to return to the lender, pocketing a profit in the process.
Hindenburg is under the criminal probe of US Government’s Department of Justice for this kind of short-selling and collusion with hedge funds.
The firm’s founder Nate Anderson reportedly specializes in identifying and profiting from corporate disasters. Hindenburg Research specializes in identifying (and profiting off of) corporate disasters.
Marc Cohodes, another short seller had alleged that Hindenburg sources information from large funds thus helping them in their ‘short’ trades.
In India, Hindenburg had earlier targeted Bollywood production company Eros alleging accounting irregularities.
The Adani Group has also said that Hindenburg Research, by their own admission, is positioned to benefit from a slide in Adani shares.
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