Plea in SC seeks probe against Adani tormentor Hindenburg

Section 15HA of the SEBI Act provides for a penalty of up to ₹25 crores or three times the amount of profits made by indulging in fraudulent and unfair trade practices relating to securities.

New Delhi | Updated: 03 February, 2023 2:27 pm IST

In a new twist to the Adani Group-Hindenburg Research saga, a petition has been filed in the Supreme Court seeking an investigation against the US-based activist financial firm whose damning report has sent Adani stocks plunging to record lows.

In his petition, advocate Manohar Lal Sharma said Hindenburg Research and its founder Nathan Anderson made money out of short-selling Adani stocks at the expense of Indian investors.

The petition sought directions to the Central government for conducting an inquiry against Hindenburg, its chief Anderson and their associates in India and abroad, and to prosecute them for forgery under section 420 of the Indian Penal Code (IPC) read with section 15HA of the SEBI Act.

Section 15HA of the SEBI Act provides for a penalty of up to ₹25 crores or three times the amount of profits made by indulging in fraudulent and unfair trade practices relating to securities.

The petitioner has accused Hindenburg Research of “exploiting innocent investors via short selling under the garb of artificial crashing”. He also prayed the court to issue directions to recover their turnover of short selling with a penalty to “compensate investors in the interest of justice”.

The PIL also seeks to declare the practice of short selling an offence of fraud.

On January 24, Hindenburg published a lengthy report accusing the Adani Group of “pulling the largest con in corporate history” by way of manipulating stock prices and accounting fraud.

Following the report, stocks of most Adani companies went down crashing with many of them losing around 50 per cent in valuation. The port-to-energy conglomerate has lost USD100 billion as the free fall in Adani stocks continues, pushing its chairman Gautam Adani to 22nd place from the third in the Forbes list of the world’s richest individuals.

At the time of the publication of the report, Adani’s assets were pegged at around USD120 billion, which has now plunged to USD56.7 billion as of Friday.

The report claimed that Adani amassed USD100 billion of his wealth in the last three years even as the countrymen suffered economic woes caused by the Covid-19 pandemic. Shares of the listed Adani Group companies shot up by an average of 819 per cent during that period.

“Key listed Adani companies have also taken on substantial debt, including pledging shares of their inflated stock for loans, putting the entire group on precarious financial footing,” the firm said, adding that it published the report a 2-year investigation.

The Adani Group has announced to sue the US firm for its “maliciously mischievous, unresearched” report. “We are evaluating the relevant provisions under US and Indian laws for remedial and punitive action against Hindenburg Research,” the group said on January 26.

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