Hindenburg has fired back at India’s stock market regulator Sebi for accusing the New York-based hedge fund of distortion in its scathing report last year on the Adani group that sent the conglomerate’s share crashing

Sebi charged that Hindenburg had “deliberately sensationalised and distorted certain facts” in its 106-page report issued in January 2023 that accused the Adani Group of “brazen stock manipulation and accounting fraud.”

The regulator’s allegations came in a show-cause notice sent June 27, 17 months after the Hindenburg report was published. Hindenburg called the Sebi notice “nonsense”. It added the regulator has no power to act against it because the fund has no Indian operations and is therefore beyond the regulator’s reach.

Hindenburg’s claims in last year’s report wiped as much as $153 billion from the group’s market value. Adani vehemently denied the allegations and its market worth has since recovered to $205 billion, $30 billion shy of its pre-Hindenburg value.

Adani shares ignored the latest Hindenburg broadside, with all 10 firms rising on Tuesday. Group chairman Gautam Adani is now reckoned to be worth $84.7 billion, making him the world’s 19th richest person, according to the Forbes Real-Time Billionaires listing.

Sebi said in its show-cause notice to Hindenburg that when the Adani case reached the Supreme Court, it had “drawn a blank,”

Hindenburg labelled Sebi’s show-cause notice “an attempt to silence and intimidate those who expose corruption and fraud perpetrated by the most powerful individuals in India”.

Hindenburg also said the regulator’s notice “identified zero factual inaccuracies with our Adani research.” Instead, it said Sebi had taken issue with the word “scandal” and said Hindenburg had quoted an individual who had alleged Sebi was corrupt.

In its counter-blast, Hindenburg also charged that Sebi has been working overtime to protect the Adanis. “Our understanding from discussions with sources in the Indian market is that Sebi’s surreptitious aid of Adani commenced almost immediately post-publication of our January 2023 report.”

In a bid to buttress its claims, Hindenburg quoted BusinessLine newspaper which said Gautam Adani had met Sebi chairman Madhabi Puri Buch twice in less than a month, and that the second meeting took place last October. Adani Group spokespersons have always insisted those meetings were routine.

Hindenburg also claimed Sebi pressured brokers to close short positions on Adani Group stocks to create conditions in which they could rise.

Responding to allegations that it had profited hugely by publishing the Adani report and betting the group’s shares would fall as a result, Hindenburg said it had made only $4 million from the saga. The firm said this had been barely enough to cover the costs of researching and producing the report.

At the time of writing, Sebi had not issued any comment on the Hindenburg reply. The Adanis declined to comment, saying the matter was between Sebi and Hindenburg.

Opening another front, Hindenburg said Sebi's notice "conspicuously" failed to mention Kotak Mahindra Bank, which it said created the offshore fund used by Hindenburg's investor partner to bet against Adani. Kotak Makindra later issued a statement, saying it had no involvement in the matter. But its shares dipped as much as 3 per cent following Hindenburg’s Sebi reply.