India's Adani Group said that it's exploring legal options against short-seller Hindenburg Research.

A report published by the research firm alleged widespread fraud against Adani Group, the conglomerate led by businessman Gautam Adani.

What Happened: Adani Group alleged that Hindenburg’s allegations have led to “unwanted anguish for Indian citizens.”

Jatin Jalundhwala, the legal head of Adani Group, said the company is evaluating “relevant provisions” under both U.S and Indian laws for “remedial and punitive action” against the research firm founded by Nathan Anderson.

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Jalundhwala questioned Hindenburg’s motive, highlighting the fact that the research firm has taken a short position in the group companies’ shares. It said the whole report was “unresearched” and “designed to have a deleterious effect on the share values” of the group’s publicly-listed stocks.

Why It’s Important: Hindenburg, in a research report on Wednesday, said it saw an 85% downside to Adani Group companies’ stocks, purely on a fundamental basis. It further alleged that the company has engaged in widespread fraud and financial malpractices.

The short seller alleged existence of various offshore shell companies run by Adani Group and questioned the high debt held by several Adani companies.

Adani Group’s bonds and publicly-listed stocks tanked in response, with Adani — the world’s fourth richest person — bleeding $5 billion from his net worth in a single day.

Price Action: Indian markets were closed on Jan. 26 to mark the country’s Republic Day.

Photo: Courtesy of Wikimedia Commons.

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