New Delhi:
The shop of Hindenburg Research, which makes its living by doing aerial research and short-selling, has been closed, and this has been announced by its owner Nathan Anderson himself. Anderson has written a letter in this regard, reading which it seems that he has decided to close Hindenburg Research because he has achieved what he wanted to achieve in life. Now he wants to spend time with family, friends and himself and what not… But, there could be some other reasons behind this story.
When the regulators started tightening their grip
Adani Hindenburg made absurd and absurd allegations regarding the group, which were later proved to be baseless in the Supreme Court of the country. After this, Indian and American regulators started tightening their noose around the neck of Hindenburg Research.
India’s markets regulator SEBI had last year issued show cause notices to entities Hindenburg Research, Nathan Anderson and Mauritius-based foreign portfolio investor Mark Kingdon for trading violations in Adani Enterprises Ltd shares following the Hindenburg report. The regulator alleged that Hindenburg and Anderson violated rules related to fraudulent and unfair trading practices and the code of conduct for research analysts.
According to SEBI’s show cause notice, the regulator alleged that before the release of the report, short-selling activity was seen in Adani Enterprises’ futures and after the report the stock fell 59% between January 24, 2023 and February 22, 2023. There was a decline of.
What did SEBI find in the investigation?
SEBI’s investigation revealed that K-India Opportunities Fund – Class F opened a trading account and started trading in Adani Enterprises shares before the release of the report. After this, FPIs sold their positions in February, making a profit of $ 22.25 million or Rs 183.24 crore. However, Hindenburg Research continued to portray its January 2023 report as true, even though it was proven false in court.
In July, the Supreme Court dismissed a review petition filed against its January 3 verdict in the Adani Group-Hindenberg Research case, in which the court expressed confidence in SEBI’s regulatory powers and ruled that the petitioner should hand over the investigation to a Special Investigation Team. Could not provide sufficient material for transfer.
American regulators also took strict action
In July, US authorities accused shortseller Andrew Left of committing fraud through his stock trades, social media activities and research reports. This shows that strict action is now being taken against traders who promote negative stock positions in America.
Prosecutors claim that Andrew Left would rapidly sell his positions after publishing research reports or making public comments. This strategy gave him the benefit of price fluctuations in the short term.
The regulator said, ‘The SEC reminds investors to remain skeptical and never make investment decisions based solely on information received from social media or other unverified platforms.’ Short-selling profits can be minimal, even if a well-researched report makes a big impact on the market. Furthermore, these modest benefits may be offset by the costs associated with lawsuits and recent government investigations.
For example, Hindenburg Research claimed it made only $4.1 million from the Adani short.
(Disclaimer: New Delhi Television is a subsidiary of AMG Media Networks Limited, an Adani Group Company.)
