SEBI Calls For Calm After Hindenburg Report, Emphasizes ‘Short Positions’ Disclaimer For Investors

In view of the recent Hindenburg Research report, India’s market regulator, SEBI, has called on investors to exercise due diligence and remain calm. The SEBI said that the report contained a disclaimer wherein Hindenburg Research had taken short positions in securities discussed therein.

The latest charges by Hindenburg Research claim that SEBI chief Madhabi Puri Buch had conflicts of interest, which impeded an effective investigation into manipulation and fraud allegations against the Adani Group.

SEBI warned, “Investors should keep calm and exercise due diligence before reacting to such reports. Investors may also like to take note of the disclaimer in the report that states that readers should assume that Hindenburg Research may have short positions in the securities covered in the report.”.

A report from Hindenburg on August 10 levelled allegations against SEBI of inaction against the Adani Group despite allegations over financial irregularities. It had questioned the SEBI’s decision to issue a show-cause notice on June 27, 2024 to Hindenburg for alleged violations of Indian securities laws. The report had accused that recent amendments to the SEBI (REIT) Regulations, 2014, have favoured a particular multinational financial conglomerate.

SEBI dismissed these allegations and said it had done proper investigation into the Adani Group. It also cited the January 3 order of the apex court in which the Supreme Court had said that out of 24, the regulator did indeed conclude 22 investigations into the Adani Group. As on March 2024, one more is completed and the last one is nearing completion.

On the show-cause notice to Hindenburg Research, SEBI explained that “It may be noted that pursuant to the completion of investigations, Sebi initiates the process of enforcement proceedings which are quasi-judicial in nature. This comprises issuance of show-cause notice and granting opportunity for hearing, which culminates in issuance of speaking order,” said Sebi.