Hindenburg claims Kotak Mahindra group's fund short-sold Adani stocks, group says wasn't aware

NEW DELHI:

After Hindenburg Research alleged that Kotak Mahindra group created and oversaw the offshore fund structure used by the investor partner of Hindenburg to short Adani stocks, the group on Tuesday said Hindenburg was never a client of its offshore fund and the fund was unaware of the US short seller being a partner of any of its investors.

 

Hindenburg had alleged that while markets regulator SEBI "seemingly tied itself in knots to claim jurisdiction over us, its 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 claimed that the group "simply named the K-India Opportunities Fund and masked the name 'Kotak' name with the acronym 'KMIL'".

 

Kotak Mahindra (International) Ltd, a unit of Kotak Mahindra Bank, said in a statement that Hindenburg was never a client of the group's K-India Opportunities Fund (KIOF) and Kotak Mahindra International Ltd (KMIL).

 

"KMIL and KIOF unequivocally state that Hindenburg has never been a client of the firm, nor has it ever been an investor in the Fund. The Fund was never aware that Hindenburg was a partner of any of its investors," a spokesperson for KMIL said in a statement.

 

"KMIL has also received a confirmation and declaration from the Fund’s investor that its investments were made as a principal and not on behalf of any other person."

 

K-India Opportunities Fund (KIOF) is a SEBI-registered foreign portfolio investor and is regulated by the Financial Services Commission of Mauritius.

 

"The Fund was established in 2013 to enable foreign clients to invest in India. The Fund follows due KYC procedures while onboarding clients and all its investments are made in accordance with all applicable laws. We have cooperated with regulators in relation to our operations and continue to do so," the statement read.

 

The SEBI has issued a show-cause notice to Hindenburg Research, Nathan Anderson and the entities of Mauritius-based foreign portfolio investor (FPI) Mark Kingdon for trading violations in the scrip of Adani Enterprises Ltd, leading up to the Hindenburg report and thereafter. In the 46-page show-cause notice, the markets regulator has alleged that Hindenburg and Anderson violated regulations under the SEBI Act, SEBI’s Prevention of Fraudulent and Unfair Trade Practices regulations, and its Code of Conduct for Research Analyst regulations.


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