Mumbai: Hindenburg Research founder Nate Anderson while officially announcing the firm's closure on Wednesday, January 15, 2025, stated in a post that the US based shortseller’s investigations have led to 100
individuals being charged civilly or criminally by regulators including billionaires and oligarchs.
“Nearly 100 individuals have been charged civilly or criminally by regulators at least in part through our work, including billionaires and oligarchs,” he wrote. “We shook some empires that we felt needed shaking.”
“To date, Hindenburg and its founders’ investigations have preceded Securities Exchange Commission fraud charges against 65 individuals, Department of Justice criminal indictments against 24 individuals, and foreign regulator sanctions and fraud charges against 7 individuals,” said its website.
While the US short seller shot to fame in India with his scathing report on Adani Group, interestingly, this wasn't Hindenburg's first time targeting an Indian company. At its inception, the short seller’s three critical research reports centered on then-US listed Indian film company Eros International alleging major accounting irregularities, including suspected undisclosed related party transactions, asset inflation and falsified revenue, among other issues.
In January 2023, the company was delisted by the NYSE. Almost 8 years after its initial reports, Indian securities regulator SEBI corroborated many of Hindenburg’s findings, fined and barred Eros promoter and managing director Sunil Lulla.
Over the years, Hindenburg acquired a reputation of publishing scathing reports targeting big companies and billionaires. It gained global attention after targeting US electric truck maker Nikola in 2020. Hindenburg's report against Nikola led to a massive stock selloff, and its founder, Trevor Milton, was sentenced to four years in prison on charges of securities and wire fraud.
In mid-2022, following Elon Musk’s agreement to buy Twitter, Hindenburg announced a short position, betting that Musk, a notoriously impulsive individual, would either try to renegotiate or walk away from the deal. “Four days later, Musk attempted to walk away from the deal, sending Twitter’s stock lower. We covered our short and later went long, believing that Musk’s arguments for backing out were unlikely to prevail in court. Musk later closed the deal at the originally agreed upon price, resulting in investment gains in both directions,” said Hindenburg on its site.
The US short seller has released reports on more than 63 companies including Supermicro, Icahn Enterprises, Block, Clover Health, Nikola Corp among others.
Now that we have come to a close of the Hindenburg saga, here is a timeline of controversies clouding the Adani Group since 2023:
In January 2023, Hindenburg Research, a US-based firm that specialises in forensic financial research, released its explosive report accusing Adani group of stock manipulation, accounting fraud, and using improper tax havens and shell companies to manage funds, significantly impacting the stock market.
Various petitions were filed seeking a court-monitored investigation, citing implications for national security and the economy. The petitions also alleged that SEBI, the market regulator, was not competent or independent enough to conduct a fair and impartial probe.
Adani Group’s counter arguments: The Adani group consistently denied the accusations, describing them as “calculated attacks on India” while SEBI defended its competence and independence in handling the investigation. “For a discredited short-seller under the scanner for several violations of Indian securities laws, Hindenburg's allegations are no more than red herrings thrown by a desperate entity,” said the Adani Group.
In January 2024, the Supreme Court ruled in favor of the Adani group and SEBI, rejecting the transfer of the probe to other investigative bodies. The Supreme Court also instructed SEBI to utilize its investigative authority to determine if the Hindenburg report's short-selling actions violated laws, resulting in investor harm.
On June 27, 2024, SEBI issued a show-cause notice to Hindenburg Research, Nate Anderson and the entities of Mauritius-based foreign portfolio investor Mark Kingdon for trading violations in the scrip of Adani Enterprises Ltd leading up to Hindenburg Report. The market regulator alleged that Hindenburg and Anderson violated regulations related to fraudulent and unfair trade practices and the code of conduct for research analysts.
According to the show cause notice, SEBI alleged that prior to the report release, short-selling activity was witnessed in the futures of Adani Enterprises and after the report the share lost 59 per cent between January 24, 2023 and February 22, 2023.
In August 2024, Hindenburg renewed its assault with “recycled claims,” which Adani Group swiftly dismissed. Speaking about the controversy, Gautam Adani said it was "a dual assault targeting our financial stability and pulling us into a political storm."
The conglomerate took a series of measures to withstand the Hindenberg storm that wiped off over $135 billion in its market value. Gautam Adani hired top-shelf US crisis communication and legal teams,
scrapped a $850 million coal plant purchase, reined in expenses, repaid some debt and promised to repay more. The conglomerate also raised over USD 5 billion (Rs 41,500 crore) in equity and a double of
that in debt.
Hindenburg also targeted Indian markets regulator chief Madhavi Puri Buch and her family, which Buch called an “attempt at character assassination. Hindenberg’s claims, published on August 10, 2024, implied that Madhabi Puri Buch held a stake in offshore entities linked to the Adani group, raising concerns about possible conflicts of interest and regulatory misconduct.
In November 2024, the United States Securities and Exchange Commission (SEC) indicted Gautam Adani for allegedly paying $265 million (about Rs 2,200 crore) in bribes to Indian government officials. The bribes were reportedly aimed at securing lucrative contracts for Adani Green Energy, the renewable energy arm of the Adani Group. The SEC alleged that Adani raised the money for the “bribery scheme” from US investors. The alleged incident occurred during a September 2021 bond offering by Adani Green, which raised $750 million, including $175 million from US investors.
Amid the bribery charges, Adani Green Energy decided to halt its proposed $600-million dollar-denominated bond issuance. The company cited the indictment as the reason for its subsidiaries’ plans to defer the bond offering.
Charging Adani with violation of antifraud provisions of the federal securities laws, the SEC complaint sought permanent injunctions, civil penalties and officer and director bars against the three executives. The complaints were filed in the U.S. District Court for the Eastern District of New York.
Adani Group denied the charges. “The allegations made by the US Department of Justice and the US Securities and Exchange Commission against directors of Adani Green are baseless,” read the statement. It said all possible legal recourse will be sought.
Meanwhile private investor and markets commentator Ajay Bagga in a long post on X enumerated several reasons for the closure of Hindenburg Research. “Damage has been done to companies, promoters and markets by targeted attacks from which they sought to benefit,” he said, adding that it was not an altruistic, truth seeking endeavour.
“Wont be missed. Dismissed,” the post ended.
