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Hindenburg Research, has released a new report that alleges that the SEBI chief and his wife were stakeholders in offshore firms linked to Adani
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The American firm accused the market regulator of showing a “surprising lack of interest in Adani’s alleged undisclosed web of Mauritius and offshore entities”
Hindenburg Research on Saturday released a report that alleged the Securities and Exchange Board of India (SEBI) did not act on claims it made in its 2023 report against the Adani Group because the market regulator’s chief, Madhabi Puri Buch, had investments in offshore firms linked to the conglomerate.
Citing documents from whistleblowers, the firm claimed that the Sebi chief Madhabi Buch and her husband Dhaval Buch had made investments, dating back to 2015, in offshore funds in Bermuda and Mauritius linked to entities allegedly used by the Adani Group to manipulate financial markets.
Their recent claims come on the heels of another investigative report released in January 2023, which alleged that the Adani group had orchestrated the “largest con in corporate history” through stock manipulation and financial misconduct.
Hindenburg Research’s 2023 report had led to massive losses for the Adani group, shaving over 100 billion dollars off their market valuation. Hindenburg had teased the release of their 2024 report, with a cryptic post on X, stating “Something big soon India”.
What is Hindenburg Research?
Hindenburg Research is a US-based investment research firm, founded by researcher Nathan Anderson. The company specialises in forensic financial research, conducting investigations and analyses on accounting irregularities, unethical business practices, and undisclosed financial issues or transactions.
One of their key practices is short selling, wherein their reports on certain companies inform their position in predicting whether the market prices of certain companies will fall. Founder and researcher Nathan Anderson refers to himself as an activist shortseller. The company shares their reports to the board of investors before release to make ‘shorting’ bids on the performance of various financial actors.
Nathan Anderson graduated from the University of Connecticut with a degree in international business and then started his career at data company FactSet Research Systems, where he worked with investment management companies. It was here and through his penchant for finding out scams, he started Hindenburg Research. The company was named after the Hindenburg disaster in 1937, which was a man-made and avoidable explosion of a German airship. “We look for similar man-made disasters floating around in the market and aim to shed light on them before they lure in more unsuspecting victims,” their website says.
Since 2017, they have released 16 reports pointing out illegal transactions, financial fraud and more in the United States Securities and Exchange Commission as well as private companies such as Aphyria, Pershing Gold, Nikola and other companies across a spectrum of sectors and countries. Their investigation into the electric car company Nikola remains one of their biggest reports, which led to a US jury convicting its founder and the company having to pay a 125 million dollar settlement to the US government.
According to a New York Times profile of the company, the Hindenburg team consists of former journalists, including from Bloomberg and CNN, and analysts. They also work with whistle-blowers within the financial sector and the companies they are targeting. The founder has declined to disclose the names of the 10 investors that bankroll this enterprise. In 2021 and 2022, the firm won the honour of ‘top short seller’ at the Activist Insight’s Investing Annual Review.
2023 Adani Report
Hindenburg Research first came into the spotlight in the Indian political and financial sphere when they released a report on the Adani group in 2023. The report claimed that the Adani group’s chairman, Gautam Adani, since 2020, had added 100 billion dollars to its valuation through stock price manipulation in 7 key listed companies.
The Hindenburg report alleged that Rajesh Adani, Gautam Adani’s younger brother, had been arrested twice for forgery and tax fraud, but was promoted to managing director of the group. Adani’s elder brother, Vinod Ambani, operated 37 shell companies, which were central to the claims of money laundering, according to the firm.
“We believe the Adani Group has been able to operate a large, flagrant fraud in broad daylight in large part because investors, journalists, citizens and even politicians have been afraid to speak out for fear of reprisal,” the Hindenburg report stated.
Hindenburg vs SEBI
In June 2024, SEBI said that Hindenburg Research had shared its findings on the Adani group with a New York-based hedge fund manager and allowed him to trade with this information.
The SEBI had launched investigations into transactions by the Adani group but the probes did not go very far. Hindenburg’s research rubbished SEBI’s claims of sharing the report and called it an attempt to silence those questioning corruption by powerful entities in India.
Notably, in January 2023 and in a review in July 2024, the Supreme Court ruled that they could not interfere in the SEBI’s jurisdiction to investigate claims against Adani made in the Hindenburg report. The Supreme Court, according to Hindenburg, had “drawn a blank” when it comes to SEBI’s investigation into the Adani group.
2024 SEBI report
After a vague post on X, Hindenburg Research released their report on SEBI’s involvement with Adani on Saturday night, amidst market anticipation. The report claims the SEBI chief Madhabi Buch and her husband had stakes in offshore firms owned by Vinod Ambani, linked to financial misconduct by the Adani group.
The report said, “We suspect SEBI’s unwillingness to take meaningful action against suspect offshore shareholders in the Adani Group may stem from Chairperson Madhabi Buch’s complicity in using the exact same funds used by Vinod Adani, brother of Gautam Adani.” In the report, investments by Madhabi Buch and her husband predate her appointment as a member of SEBI in 2017 and as chairperson in 2022.
The report claims that weeks before Buch’s appointment to SEBI in 2017, her husband took over sole control of their investments to avoid coming under the scanner in her position as a market regulator. Madhabi Buch and her husband Dhaval Buch released a joint statement denying all allegations against them.
They said, “In the context of allegations made in the Hindenburg Report dated August 10, 2024, against us, we would like to state that we strongly deny the baseless allegations and insinuations made in the report. The same is devoid of any truth. Our life and finances are an open book. All disclosures as required have already been furnished to SEBI over the years.”
US short-seller Hindenburg Research – which had wiped out much of Adani Group’s net worth with its allegations of financial irregularities last year – on Saturday claimed in a blog that market regulator Sebi’s chairperson Madhabi Puri Buch and her husband Dhaval Buch had stakes in “obscure offshore funds” used in the Adani scandal.
The American firm accused the market regulator of showing a “surprising lack of interest in Adani’s alleged undisclosed web of Mauritius and offshore shell entities” because of Buch’s secret financial interest in the conglomerate.
Here are 10 points on the Hindenburg-Adani saga 2.0.
- “Madhabi Buch, the current chairperson Of SEBI, and her husband had stakes in both obscure offshore funds used in the Adani money siphoning scandal,” the American short-seller said in a blog post, which is expected to rock the Indian political space.
- Per Hindenburg’s 2023 allegations, obscure offshore Bermuda and Mauritius funds, allegedly controlled by Gautam Adani’s elder brother Vinod Adani, inflated the Adani Group companies’ stock prices.
- Citing an IIFL document, the company claimed the couple’s net worth is estimated to be $10 million and the source of the secret investment was salary.
- “In brief, despite the existence of thousands of mainstream, reputable onshore Indian mutual fund products, an industry she now is responsible for regulating, documents show SEBI Chairperson Madhabi Buch and her husband had stakes in a multi-layered offshore fund structure with miniscule assets, traversing known high-risk jurisdictions, overseen by a company with reported ties to the Wirecard scandal, in the same entity run by an Adani director and significantly used by Vinod Adani in the alleged Adani cash siphoning scandal,” it alleged.
- It claimed that the Supreme Court had said in its order that Sebi had “drawn a blank” in its investigations into who funded Adani’s offshore shareholders. Hindenburg claimed that the market regulator was reluctant to probe a trail of money which its chairperson might have led. “If SEBI wanted to find the offshore fund holders, perhaps the SEBI chairperson could have started by looking in the mirror. We find it unsurprising that SEBI was reluctant to follow a trail that may have led to its chairperson,” it added.
- “We had previously noted Adani’s total confidence in continuing to operate without the risk of serious regulatory intervention, suggesting that this may be explained through Adani’s relationship with SEBI Chairperson, Madhabi Buch,” the firm had said in a teaser in the morning.
- Meanwhile, Madhabi Puri Buch and her husband Dhaval Buch denied the allegations. “In the context of allegations made in the Hindenburg Report dated August 10, 2024, against us, we would like to state that we strongly deny the baseless allegations and insinuations made in the report. The same is devoid of any truth. Our life and finances are an open book. All disclosures as required have already been furnished to SEBI over the years,” they said.
- Reacting to the explosive allegations, Congress demanded the Centre act immediately to eliminate all conflicts of interest in the regulator’s investigation of the Adani Group. “This had tied its hands to the extent that ‘the securities market regulator suspects wrongdoing, but also finds compliance with various stipulations in attendant regulations… It is this dichotomy that has led to SEBI drawing a blank worldwide’,” Jairam Ramesh said quoting the Expert Committee.
- Jairam Ramesh also demanded a JPC probe. “The government must act immediately to eliminate all conflicts of interest in the SEBI investigation of Adani. The fact is that the seeming complicity of the highest officials of the land can only be resolved by setting up a JPC (joint parliamentary committee) to investigate the full scope of the Adani mega scam,” the former Union minister said in his statement.
- In January last year, Hindenburg Research accused Adani Group of pulling “the largest con in corporate history” by using a web of companies in tax havens to inflate its revenue and manipulate stock prices, even as debt piled up. The conglomerate denied all allegations. However, the company suffered a massive erosion of its wealth as the group’s share prices plummeted. The conglomerate almost lost $150 billion in market value. They have now recovered a significant chunk of their lost wealth over the past few months. Inputs
