Hindenburg wonders why SEBI did not name Kotak in show cause notice

Billionaire Uday Kotak's bank and brokerage linked to offshore fund profiting from Adani shares, sparking SEBI investigation.

Billionaire banker Uday Kotak founded bank as well as brokerage created and oversaw an offshore fund used by an unnamed investor to profit from a plunge in Adani shares that followed a damning Hindenburg report, the US short seller said on July 2, 2024.

Hindenburg Research, which had in a January 2023 report alleged stock market manipulations and accounting fraud at the Adani group, said it has received a show cause notice from the Indian markets regulator SEBI over gains made from betting on the conglomerate's shares.

The US short seller said it had disclosed that it had bets against the group, adding that its gains were only over ₹4 million.

Calling the Securities and Exchange Board of India's (SEBI) show cause notice as attempted intimidation, Hindenburg asked why the market regulator did not name Kotak.

SEBI's notice "conspicuously failed to name the party that has an actual tie to India: Kotak Bank, one of India's largest banks and brokerage firms founded by Uday Kotak, which created and oversaw the offshore fund structure used by our investor partner to bet against Adani," Hindenburg said.

Instead the regulator simply named the K-India Opportunities fund and "masked the 'Kotak' name with the acronym 'KMIL'," it added.

KMIL refers to Kotak Mahindra Investments Ltd, an asset management company.