According to court documents filed in Ontario, Nate Anderson, the ‘activist’ short-seller behind Hindenburg Research, is under investigation for alleged collaboration with hedge funds in preparing reports targeting companies. The allegations surfaced as part of a complex defamation lawsuit involving Canada’s Anson hedge fund.

Documents submitted to the Ontario Superior Court of Justice reveal that Anson’s head, Moez Kassam, stated his firm shared research “with a wide variety of sources,” including Anderson’s Hindenburg Research. The filings suggest that Hindenburg may have worked with Anson on a report, raising concerns about potential securities fraud. If proven, such undisclosed coordination between short-sellers and hedge funds could lead to charges by the U.S. Securities and Exchange Commission (SEC).

Short-selling involves borrowing shares, selling them, and repurchasing them at a lower price after a stock decline, often triggered by negative reports. The involvement of hedge funds is particularly concerning, as they could place parallel bets, exacerbating downward pressure on stock prices.

The website Market Frauds, which reviewed the court documents, claimed that email exchanges between Anderson and Anson indicated that Hindenburg was effectively acting on Anson’s instructions. “Anderson had no editorial control and was being directed on what to publish,” the website alleged, sharing screenshots of purported email interactions to support its claims.

The documents also reference a 2020 Hindenburg report on Facedrive, a Canadian ride-sharing company, which accused the firm of being overvalued and excessively compensating promoters. Court filings suggest Anson had prior knowledge of the report’s release and communicated with Anderson about it.

These revelations come amid a separate investigation by the U.S. Justice Department and the SEC. In June, Anson Funds Management and Anson Advisors Inc. agreed to pay $2.25 million to settle SEC claims, without admitting wrongdoing, for failing to disclose payments to external publishers of negative research.

Last week, Anderson announced the closure of Hindenburg Research, which gained global attention in 2023 for its reports on billionaire Gautam Adani’s conglomerate. The reports triggered political controversies and significant financial losses. Anderson did not specify a reason for the shutdown but expressed a desire to spend more time with family and friends.

“Nearly 100 individuals have faced civil or criminal charges, in part due to our work, including billionaires and oligarchs,” Anderson wrote in his announcement. “We’ve shaken some empires that we believed needed shaking.”

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Hindenburg Research, the US-based investment firm known for its aggressive short-selling strategies, has officially shut down. Founder Nate Anderson announced the decision on 15 January 2024, stating that the firm had completed its pipeline of investigative projects, including its high-profile reports targeting Indian billionaire Gautam Adani and his conglomerate. Anderson plans to step away from the high-pressure world of financial research to focus on personal pursuits, including spending time with his family and investing in low-stress opportunities.

A Personal Note From Our Founderhttps://t.co/OOMtimC0gV

— Hindenburg Research (@HindenburgRes) January 15, 2025

The firm gained significant attention in India after its 2023 reports accused the Adani Group of financial misconduct, leading to a massive selloff of the conglomerate’s shares and wiping out billions of dollars in market value. Although the Adani Group vehemently denied the allegations and managed to recover most of its losses, the reports left a lasting impact on its reputation and stock performance.

In addition to its allegations against the Adani Group, Hindenburg Research also targeted Madhabi Puri Buch, the chairperson of the Securities and Exchange Board of India (SEBI). In 2024, the firm accused Buch and her husband, Daval Buch, of having ties to offshore funds allegedly linked to the Adani Group. These claims were strongly denied by the Buchs, who labeled them as “malicious and manipulative.” The allegations against SEBI’s chairperson further intensified the controversy surrounding Hindenburg’s activities in India, raising questions about its motives and methods.

Hindenburg Research’s closure comes at a politically sensitive time, just before the end of President Biden’s term and ahead of the upcoming US presidential election. The timing has raised eyebrows, especially as the firm faced increasing scrutiny over its methods and motivations. Notably, a Republican Congressman recently urged the US Department of Justice to preserve all documents related to investigations involving Adani and his companies, adding to the controversy surrounding Hindenburg’s activities.

Anderson did not cite a specific reason for the shutdown but reflected on the personal toll of his career, acknowledging that the intense focus on his work had come at the expense of other aspects of his life. He expressed a desire to step back, pursue hobbies, and spend more time with his fiancée and their child. Anderson also mentioned that he had accumulated sufficient wealth to ensure financial security and would now focus on low-stress investments like index funds.

As for his team, Anderson plans to support their transition into new roles. Some members are expected to start their own research firms, while others may explore different career paths. Anderson praised his former colleagues as talented and easy to work with, expressing confidence in their future endeavors.

Hindenburg Research’s legacy is marked by its controversial reports targeting companies worldwide, including the Adani Group, Ebix Inc., Wags Capital, and Tingo Group. While the firm positioned itself as a watchdog exposing corporate misconduct, critics have often accused it of using its reports to manipulate markets for financial gain.

(With inputs from Economic Times)

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The Indian stock market, which has been relatively stable, delivered a tight slap to Hindenburg Research, a US-based short-selling firm, as well as to opposition parties in India, such as Congress and its sympathisers. Their economic conspiracy theories did not yield the results they had hoped for and ultimately backfired.

On the morning of 12 August 2024, there was no major movement in the stock market. The market opened lower than the close on 9 August 2024 but soon regained ground. By noon, the BSE Sensex had risen by over 200 points and the Nifty 50 by 50 points. Most major stocks traded within a narrow range, except Adani Group shares, which had declined since the morning. The BSE Sensex was up 209 points at 79,904, while the Nifty was at 24,412, showing a 50-point increase during the day.

Despite fears of a significant drop following the release of the Hindenburg Research report which alleged that the SEBI chief had connections with offshore funds allegedly used by the Adani’s to manipulate their share prices—the major stock indices remained relatively steady and traded within a limited range.

However, Adani Group’s stocks suffered notable losses, estimated at $13.4 billion, according to Reuters. The S&P BSE Sensex, which had opened 375 points, managed to recover some of the losses throughout the day, ending with a slight drop of 57 points, or 0.07%, at 79,649. Similarly, the NSE Nifty-50 index closed down by 20.50 points, or 0.08%, at 24,347.

Commenting on the market’s subdued reaction, Arun Kejriwal, founder of Kejriwal Research & Investment Services, told The Hindu, “Investors and institutions understand that this [Hindenburg Report] is an extension of the previous report and is largely a personal attack on a regulator, which has already issued a show-cause notice. Hence, the personal allegations against the SEBI chief have been largely disregarded.”

He noted that the recent losses for Adani Group stocks were “minimal” compared to the significant declines experienced following the first Hindenburg report released 18 months ago. On 12 August 2024, eight out of ten Adani Group stocks closed lower, including Adani Enterprises (-1.09%), Adani Ports (-2.02%), Adani Power (-0.65%), Adani Energy Solutions (-3.70%), Adani Total Gas (-4.03%), Adani Wilmar (-4.14%), NDTV (-3.08%), and ACC (-1.55%).

Since the release of the first Hindenburg report in January 2023, both the NIFTY index and investors, including Foreign Institutional Investors (FIIs) and Domestic Institutional Investors (DIIs), have approached the market with caution. As of 9 August 2024, the NIFTY has risen by approximately 6,249 points. During this period, FIIs have invested a total of about ₹2.1 lakh crores, while DIIs have contributed around ₹4.4 lakh crores. This indicates that investors are not swayed by disruptive actors like Hindenburg Research but instead maintain a “calm and due diligence” approach before reacting to such negative reports or claims.

This is how NIFTY & investors (FIIs & DIIs) have behaved since the first Hindenberg report was released on Jan-2023

1. NIFTY has moved up ~6249 points (as on Aug 9th)
2. FIIs have made a cumulative investment of ~INR 2.1 Lakh crores
3. DIIs have made a cumulative investment of… pic.twitter.com/LvzAolFvIC

— KishoreIyer (@KishoreIyer5) August 12, 2024

(With inputs from The Hindu)

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After Hindenburg Research, a US-based short selling firm, allegedly earned only $4.1 million from betting against Adani Group securities—an amount insufficient to cover their research costs—they have once again in desperateness posted a cryptic message on their official X account on 10 August 2024: “Something big soon India.”

Something big soon India

— Hindenburg Research (@HindenburgRes) August 10, 2024

This development follows Hindenburg’s January 2023 report, which accused the Adani Group of insider trading and stock market violations, leading to a dramatic fall in Adani’s stock prices and reported losses exceeding $100 billion. The Adani Group has consistently denied these allegations, calling them baseless. At their Annual General Meeting in June, Chairman Gautam Adani responded, asserting that the group’s integrity remained unshaken despite the attack.

Additionally, the Supreme Court of India recently rejected a petition for a court-monitored investigation into the Adani-Hindenburg issue, based on a report by the Securities and Exchange Board of India (SEBI).

Recent complications have arisen with allegations from Mahesh Jethmalani, a senior Indian lawyer and BJP leader. In July 2024, Jethmalani alleged that an American businessman with Chinese ties, specifically Mark Kingdon of Kingdon Capital Management LLC, had commissioned the Hindenburg report. He claimed that Kingdon and his associate Anla Cheng had used Kotak Mahindra Investments Limited to establish a trading account for short-selling Adani shares. Jethmalani called for an investigation into potential connections between political critics of Adani and China, suggesting that the report might be Chinese retaliation for losing infrastructure projects like the Haifa Port.

Here’s a huge smoking gun in the sordid episode of the short sale of #Adani shares by #Hindenburg. Pursuant to #SEBI's notice to Hindenburg, the following facts emerge:
1. Hindenburg – a research agency – was hired by American businessman #MarkKingdon to prepare a report on the… https://t.co/yar0uEuarm

— Mahesh Jethmalani (@JethmalaniM) July 4, 2024

On the other hand, SEBI’s show-cause notice to Hindenburg, issued on 26 June 2024, accused the firm of “deliberately sensationalizing and distorting certain facts” in their January 2023 report and collaborating with a New York hedge fund for their short positions. SEBI has given Hindenburg 21 days to respond.

The 46-page notice alleged that Hindenburg and Kingdon established a relationship in autumn 2022, prior to the report’s release, with Kingdon setting up positions in Adani stocks to profit from their decline.

Hindenburg responded by publishing their notice on their website, stating that they made only $4.1 million from their Adani positions. They lamented SEBI for not focusing on the evidence they provided about Adani’s offshore shell entities and financial movements. Hindenburg also pointed out that SEBI’s notice failed to address Kotak Mahindra Bank’s role, which had created and managed the offshore fund structure used by Hindenburg’s partner.

Hindenburg Research LLC – Who Are They?

Hindenburg Research LLC, a New York City-based firm, is recognised for its focus on short-selling strategies. Short sellers are investors who bet against specific stocks by borrowing them, selling them at current market prices, and then repurchasing them later at a lower price to return to the lender, thereby making a profit from the price drop.

The firm is currently under investigation by the U.S. Department of Justice for allegations related to short-selling practices and potential collusion with hedge funds.

Nate Anderson, the founder of Hindenburg Research, is known for his expertise in identifying and capitalizing on corporate crises. The firm’s operations center around uncovering and profiting from corporate failures.

Another short seller, Marc Cohodes, also claimed that Hindenburg obtains information from large funds to support their short trades.

In India, Hindenburg previously targeted Bollywood production company Eros, accusing it of accounting irregularities.

The Adani Group has argued that Hindenburg Research, by its admission, stands to gain financially from a decline in Adani’s share prices.

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