Hindenburg’s charges against Uday Kotak on SEBI notice
The US-based research firm Hindenburg on Tuesday accused the regulator SEBI of hiding the role of Kotak Mahindra Bank in short-selling Adani Group firms’ shares. “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 a long post on July 2.
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Hindenburg alleged that SEBI’s omission of Kotak’s name may be meant to protect the businessman Uday Kotak from scrutiny. KMIL is Kotak Mahindra Investments Ltd. Kotak Mahindra Bank, a private sector lender and brokerage firm founded by Uday Kotak, created and oversaw the offshore fund structure used by the investor partner of US-based Hindenburg to short Adani stocks, said Hindenburg.
“Uday Kotak, founder of the bank, personally 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,” Hindenburg said in a detailed post.[1]
US-based Hindenburg Research received a show cause notice from market regulator SEBI regarding its Adani Report. The 46-page show cause notice was delivered on June 27, said Hindenburg. The blog post said that the research firm was short on Adani shares ‘through a deal with an investor partner who was indirectly short Adani derivatives through a non-Indian, offshore fund structure’.
The post revealing SEBI notice reiterates its position that Hindenburg had adequately disclosed that it was short on Adani shares, ‘so readers could weigh the potential for bias given that we stood to benefit from a decline in Adani shares.’ On January 24, 2023, Hindenburg Research published a report accusing Adani Group companies of stock manipulation and accounting fraud, ahead of a proposed Rs.20,000 crore share sale by Adani Enterprises. The conglomerate termed the report as malicious and baseless.
Reference:
[1] Adani Update – Our Response To India’s Securities Regulator SEBI – Jul 1, 2024, Hindenburg Research
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this kind of things only make people loose trust in offshore funds and SEBI and bank. Kotak Bank should come out with clarification.