U.S. short-seller Hindenburg Research said that it received a "show cause" notice from the Securities and Exchange Board of India (SEBI) related to shorting Adani stock. 

What Happened: Hindenburg said on Monday that it had received an email from SEBI last week "outlining the suspected violations of Indian regulations" over shorting Adani Group last year.

Hindenburg shared the notice received by the regulatory body in a blog post. The notice underscored the US firm's concentration in short-selling activity in the derivatives of Adani Enterprises ahead of the release of its scathing report on the research firm’s website in January 2023, which accused the Gautam Adani-led group of financial wrongdoing.

SEBI’s notice highlighted that before the Hindenburg Report was released, a concentration of short-selling activity was seen in the derivatives of Adani Enterprises, the conglomerate’s flagship firm. It added that following the report, the price of the stock fell by around 59% between January and February 2023.

See Also: Here’s How Much Hindenburg Research Made From The Adani Short: ‘It Was Never Justifiable From A Financial…’

Hindenburg defended itself by saying that it had already disclosed its short position in the 2023 article "so readers could weigh the potential for bias." 

Moreover, the short-seller has now revealed new details regarding its short selling, dragging Kotak Bank into the saga. In the blog post, the Hindenburg revealed that Kotak Bank had established the offshore fund used by its investor partner for shorting Adani shares. 

Hindenburg has further accused SEBI of aiding Adani and attempting to "silence and intimidate" the short seller for exposing the "corruption and fraud perpetrated by the most powerful individuals in India."

The company is now in the process of filing a right to information request seeking the names of SEBI personnel who handled the Adani case and the Hindenburg case. It is also seeking information regarding meetings and communications between SEBI and Adani.

Price Action: Shares of Adani Enterprises were down 0.79% at ₹3158.55 on Tuesday morning.

Read Next: Mahindra And Mahindra Total Sales Grow 9.17% To 1.16 Lakh Units In June