Hindenburg Research has said that contrary to claims made by Indian regulatory authorities that it had a massive financial windfall from its short position in Adani’s securities, it had made only $4.1 million in gross revenue.
“We have made $4.1 million in gross revenue through gains related to Adani shorts from that investor relationship. We made just $31,000 through our own short of Adani US bonds held into the report. It was a tiny position,” it said in its response to a show-cause it received from the Securities and Exchange Board of India (SEBI).
“Net of legal and research expenses (including time, salaries/compensation and costs for a 2-year global investigation) we may come out ahead of break-even on our Adani short,” it added.
In the show-cause notice, SEBI’s alleged that Hindenburg Research had a profit sharing agreement with its client Kingdon Capital which would share 30 per cent of its net profits from trading with the short seller, but this was reduced to 25 per cent. K India Opportunities Fund, which made the transactions for Kingdon, remitted proceeds of $54 million to a master fund owned by Mark Kingdon, who also controlled Kingdon Capital.
In the show-cause notice SEBI has alleged that Hindenburg Research was involved in unfair practices and violated Indian regulations with respect to trading in the shares of Adani Enterprises.
Among the violations detailed in the notice are profiting from a pre-planned publication of the report without complying with Research Analyst regulations and deflating scrips prices to the maximum extent possible through misleading statements.
