Adani Group will sue US-based Hindenburg Research after it released a 106 page report alleging stock manipulation and accounting fraud against Adani Group.
Jatin Jalundhwala, the legal group head of the Adani Group, said in a statement that they are looking into relevant US and Indian laws under which they can take action against Hindenburg Research.
Adani Group to Take Legal Action
The Adani Group released a series of statements accusing the Hindenburg Group of being malicious and saying that they will also benefit from Adani’s falling share value. According to Adani, this report, published on January 24, 2024, is an unresearched report created with malicious intent. It has affected their group’s shareholders and investors. It has also created volatility on the Indian stock market, which is of great concern.
The statement continued by stating that the report was created and designed solely to create a negative effect on the share values of Adani Group companies, as the research group itself has admitted that they were positioned to benefit from a slide in Adani’s shares.
Adani also said that they were disturbed by this intentional and reckless attempt to mislead the investor community and the general public. This also undermines the reputation of the Adani Group and its leaders.
Hindenburg’s Response to the Legal Action
Hindenburg responds to the threat by stating that they stand by their report and that any action taken against them would be meritless. They continued that if Adani was serious about the lawsuit, then they should file it in the US, where they operate. They have a long list of documents to which they would like access during the trial.
According to Hindenburg, they have asked 88 straight-forward questions at the conclusion of the report, which if answered can give the company a chance to be transparent. So far, Adani has answered none of these questions.
The group then pointed at the Adani Group’s reaction to their paper and stated that, as expected, Adani has resorted to bluster and threats. In a statement to the media today, Adani referred to the 106-page report, which has 32,000 words and 720 citations, prepared over the course of two years, as “unresearched.”
Impact of the Report on the Adani Group’s Value
After the report was published, Adani Group Companies’ shares came under heavy selling pressure on the stock exchanges. Nine of the Adani Group shares fell up to 8% and lost an aggregate of over 80,000 crore in market capitalisation.
Even though the shares fell hard, the all-round selling by local and foreign investors dampened the impact to quite an extent. Sensex closed 1.27 percent, or 774 points lower, at 60,205.06, and the NSE Nifty Index fell 226 points to 17,891.95 for Adani.
Meanwhile, Adani Enterprises’ Rs 20,000 crore public offering is set to open for subscription on Friday.
Hindenburg Research
Hindenburg Research is a US-based financial research firm founded by Nate Anderson in 2018. The company is focused on investigating and exposing fraud and misconduct in public companies. Hindenburg Research is known for publishing detailed research reports on companies and individuals that it believes to be engaging in fraudulent activities, and it has been involved in several high-profile cases.
The firm uses forensic accounting, legal research, and investigative journalism to uncover information about the companies and individuals it investigates. They are known for their short selling, and their reports have led to many company delistings, mergers and acquisitions, and CEO resignations.
