Why has SEBI accused Hindenburg of breaking Indian law, and why has Hindenburg said that’s ‘nonsense’?

On July 1, 2024, US-based short-seller Hindenburg Research received a show cause notice from SEBI accusing it of short selling Adani Enterprises stock based on non-public information before releasing its 2023 report alleging stock manipulation and accounting fraud by the Adani Group. Hindenburg dismissed the notice as an attempt to intimidate whistleblowers. The report led to a significant drop in Adani's stock value. SEBI’s notice claimed Hindenburg colluded with Kingdon Capital Management to profit from the report. Hindenburg rejected the claims, alleging SEBI was deflecting from its failure to investigate corruption. Kotak Mahindra Bank, mentioned in the notice, denied involvement with Hindenburg, emphasizing its adherence to KYC regulations.