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ADANI SAGA : How the cookie crumbles ? Part II



According to Sebi’s findings, Kingdon allegedly entered into an agreement with Hindenburg in May 2021 to share 30 per cent of the profits from trading in researched securities. The SCN claims the disclaimer in Hindenburg’s report, stating it held positions only through non-Indian traded securities, was misleading, as it concealed its direct stake in profits from Kingdon’s positions.

In first reactions, governance professionals and independent analysts feel the Sebi action seems excessive and could have a chilling effect on the independent views and research efforts that are important for a vibrant securities market. SEBI should not shoot the messenger. They should be seen doing the right thing. They seem to be going into details, which are not necessary,” Shriram Subramanian, founder of InGovern Research.


But mere posturing may not do it for Hindenburg Research if it it has been called out on a very basic misstatement vis-a-vis it's profiteering while seeming to take the high ground. SEBI's jurisdiction over Hindenburg Research is shaky ground although any profit made in violation of its own disclosure may merit serious action despite claims of 'immateriality' of profits booked by Hindenburg. A more direct implication for SEBI seems to be the unhealthy mix of political attacks ranging from concerted or biased action ranging from questions in parliament to leaks in the press. The limits to 'Everything is fair in love, war & politics' does not appear to be laid down. SEBI & the government would be uneasy given that this may well become a source of foreign interference in future.


But, overall, as Gandhi said ..' Better chaos than the peace of the grave..'. Although this was stated in the context of colonial occupation, it would be dangerous to assume that all the institutions viz. SEBI, Parliament, Supreme Court included would function well without scrutiny. That extra scrutiny in the national & international appears to be the biggest gains of the entire Hindenburg saga ! - To be continued

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