ED, Sebi probing the role of six short sellers in Adani group stocks

Hindenburg had taken position on Adani overseas listed securities

A Supreme Court-appointed committee has said market regulator Sebi and the Enforcement Directorate have found evidence of short selling and profiting following the Hindenburg Research report publication on January 24 and are investigating the role of six entities which indulged in short selling.

“The Enforcement Directorate has found intelligence about potentially violative and concerted selling by specific parties just ahead of the publication of the Hindenburg Report, and this may have led to credible charges of concerted destabilisation of the Indian markets. Sebi ought to be probing such actions under securities laws,” the report said.

The report said Sebi found out some entities had taken short positions prior to the Hindenburg Report and profited when the price crashed after Hindenburg published the report. According to Sebi, suspicious trading has been observed on the part of six entities which includes four FPIs, one body corporate, and one individual, the report said.

“Sebi has also found that some entities have taken short positions prior to the publication of the Hindenburg Report and have profited from squaring off their positions after the price crashed upon publication of the report,” the report said, adding that detailed investigations are being carried out by Sebi.

The committee said these are still under investigation and the committee, therefore, does not express any opinion on merits. “Suffice to say, it would not be possible to return a finding of regulatory failure on this count since Sebi has an active and working surveillance framework to take notice of high price and volume movements and has applied itself to the data generated by such surveillance, applying objective criteria, to consider if the integrity of the natural price discovery process has been manipulated,” it said.

In its disclaimer, Hindenburg Research had said that it held short positions in Adani companies through US-traded bonds and non-Indian-traded derivatives, along with other non-Indian-traded reference securities. This report relates solely to the valuation of securities traded outside of India.

An email sent to the New York-based short seller, Hindenburg Research, on Friday, after the SC report was made public, did not elicit any response.