SEBI Responds to Hindenburg Research Report: Reassurance on Investigations and Regulatory Processes
SEBI has responded to the recent report by Hindenburg Research, dated August 10, 2024, addressing several claims and concerns raised. The report touches on SEBI’s actions regarding the Adani Group, the issuance of a show cause notice to Hindenburg Research, and recent changes to regulations. SEBI’s statement aims to clarify these issues, reassure investors, and affirm its commitment to maintaining the integrity and growth of India’s capital markets.
SEBI’s statement emphasizes that investors should remain calm and exercise caution in response to the Hindenburg Research report dated August 10, 2024. It highlights the importance of due diligence and draws attention to the disclaimer in the report indicating that Hindenburg Research might hold short positions in the securities discussed.
1. SEBI has noted the report by Hindenburg Research dated August 10, 2024. Investors should stay calm and carefully consider such reports. They should also be aware that Hindenburg Research may hold short positions in the securities they discuss.
2. The report claims SEBI has not acted against the Adani Group and questions SEBI’s decision to issue a show cause notice to Hindenburg Research on June 27, 2024. It also alleges SEBI changed regulations to benefit a large financial conglomerate. SEBI needs to address these concerns.
3. The allegations by Hindenburg Research against the Adani Group have been investigated by SEBI. The Supreme Court noted on January 3, 2024, that SEBI had completed most investigations into the Adani Group. Further investigations involved many communications and documents.
4. After completing investigations, SEBI starts enforcement proceedings, which involve issuing show cause notices, holding hearings, and issuing final orders. SEBI does not comment on ongoing investigations.
5. The report questions SEBI’s issuance of a show cause notice to Hindenburg Research. This notice was issued following legal procedures, and Hindenburg Research has published it on their website. The matter is still being handled according to established procedures.
6. The report also criticizes SEBI for changes to the SEBI (REIT) Regulations 2014, suggesting they benefit a large financial conglomerate. SEBI’s regulations are updated through a consultation process involving various stakeholders. Changes are only made after board approval, and meeting agendas and outcomes are published for transparency.
7. SEBI promotes various financial instruments like REITs, InvITs, and Municipal Bonds to improve market access and capital formation. Claims that SEBI’s actions only benefit one company are incorrect.
8. SEBI has systems to manage conflicts of interest, including disclosure requirements and recusal procedures. The Chairperson has made necessary disclosures and recused herself from matters with potential conflicts.
9. SEBI has built a strong regulatory system that follows global best practices to protect investors and support market growth. SEBI is committed to maintaining the integrity and development of India’s capital markets.
Udpate
The Financial Services Commission of Mauritius clarified on Tuesday that the offshore funds named in Hindenburg Research’s August 10, 2024 report are not based in Mauritius.
The FSC stressed that it does not permit shell companies and emphasized that “IPE Plus Fund” and “IPE Plus Fund 1,” mentioned in the report, are neither registered with nor domiciled in Mauritius.
The FSC denied any links between the funds and the country.
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