Hindenburg Research has alleged that even though Kotak Bank created and oversaw the offshore fund structure used by an investor partner to bet against Adani stocks, Sebi masked the “Kotak” name with the acronym “KMIL” in the show-cause notice issued by the market regulator to the short seller firm.
“While SEBI seemingly tied itself in knots to claim jurisdiction over us, its notice conspicuously failed to name the party that has an actual tie to India: Kotak Bank, one of India’s largest banks and brokerage firms founded by Uday Kotak, which created and oversaw the offshore fund structure used by our investor partner to bet against Adani. Instead it simply named the K-India Opportunities fund and masked the “Kotak” name with the acronym “KMIL”,” Hindenburg said in response to the Sebi show-cause.
“Uday Kotak, founder of the bank, led SEBI’s 2017 Committee on Corporate Governance. We suspect SEBI’s lack of mention of Kotak or any other Kotak board member may be meant to protect yet another powerful Indian businessman from the prospect of scrutiny, a role SEBI seems to embrace,” the short seller firm alleged.
Responding to Hindenburg allegations,Spokesperson, Kotak Mahindra Bank Ltd said, K- India Opportunities Fund Ltd. (KIOF) is a SEBI-registered Foreign Portfolio Investor and is regulated by the Financial Services Commission of Mauritius. “The Fund was established in 2013 to enable foreign clients to invest in India. The Fund follows due KYC procedures while onboarding clients and all its investments are made in accordance with all applicable laws. We have cooperated with regulators in relation to our operations and continue to do so,” the spokesperson said.
“Kotak Mahindra International Limited (KMIL) and KIOF unequivocally state that Hindenburg has never been a client of the firm nor has it ever been an investor in the Fund. The Fund was never aware that Hindenburg was a partner of any of its investors. KMIL has also received a confirmation and declaration from the Fund’s investor that its investments were made as a principal and not on behalf of any other person,“ the statement added.