Adani-Hindenburg Review Petition: SEBI Rules Out Stock Manipulation In Adani After Hindenburg Report

Pratichha S.
Oct 3
5 min read

Adani-Hindenburg clash unfolded as one of India’s most debated financial controversies, beginning in January 2023. This is the time when Hindenburg Research accused the Adani Group of stock manipulation, accounting irregularities, and the use of offshore shell entities. The allegations, released just before Adani’s ₹20,000 crore FPO, caused a massive stock market fall and triggered political chaos, forcing SEBI and even the Supreme Court to intervene.

Over the next two years, investigations revealed complex fund flows through entities like MTPL and RIPL, but SEBI’s final order dismissed the charges. SEBI cited timely repayments, lack of evidence of market manipulation, and the fact that related-party transaction rules only expanded after April 2023.

This sequence of events raises a central question: was the controversy a matter of fraudulent practices or simply a clash between evolving regulatory definitions and Hindenburg’s aggressive reporting?

Hindenburg Reports: Track Records for Outstanding Research Reports

Hindenburg Research has built a strong track record of uncovering major financial frauds and irregularities across global companies. Their investigations have led to SEC fraud charges, Department of Justice indictments, and regulatory actions worldwide.

However, despite such a history of impactful findings, a critical gap remains: WHY SEBI HAS NOT ACTED DECISIVELY on Hindenburg’s allegations AGAINST THE ADANI GROUP EVEN AFTER TWO YEARS. This lack of clarity raises questions on the strength of evidence required or possible oversight in regulatory response.

To make this gap analysis more interesting, here is an overview of the proven track record of Hindenburg Research organization:

2024 (October): Wags Capital

Hindenburg exposed fabricated financials and investor misrepresentation by Utah influencer Aaron Wagner. Their findings led to Wagner’s arrest and indictment, proving the accuracy and weight of their investigations.

2023 (October): Nanban Ventures

Research revealed Nanban as a potential affinity scam targeting the Indian-American community. The SEC froze $130 million in assets, showing how Hindenburg’s work triggered strong enforcement.

2023 (June): Tingo Group

Hindenburg highlighted falsified accounts and massive fraud, which led to SEC charges and a criminal indictment against the company’s executives. This case showed how its reports can unmask global corporate frauds.

2023 (May): Carl Icahn Enterprises

They revealed misleading disclosures in margin loans, leading to SEC charges and penalties. Once again, regulators acted quickly, validating the depth of their research.

2022: Multiple Cases (Enochian Biosciences, Ebix, Singularity Future Tech, J&J Purchasing)

Across these cases, Hindenburg’s findings led to SEC complaints, criminal indictments, boardroom resignations, and even bankruptcies. Their role was not just about uncovering fraud but also about shaping regulatory outcomes.

A Chain of Events From 2023: The Hindenburg Allegations

In January 2023, Hindenburg Research, a US-based short-seller, published a detailed report accusing the Adani Group of accounting irregularities, stock manipulation, and the use of offshore shell entities. The Hindenburg research on the Adani group triggered a sharp fall in Adani stocks, drew global media attention, and sparked one of India’s biggest financial controversies in recent times. The claims also fuelled political debates, with opposition parties demanding stricter scrutiny of this conglomerate’s operations on stock exchanges.

On January 25, 2023, Hindenburg Research released a sensational report accusing the Adani Group of financial fraud and stock manipulation, just days before the company’s ₹20,000 crore follow-on public offer (FPO). The report triggered a massive market reaction, wiping out billions in investor wealth as Adani Enterprises’ shares plunged by nearly 59%. The Supreme Court soon stepped in, directing SEBI to investigate the allegations and monitor investor protection, marking the beginning of a long legal and regulatory tussle.

The Adani Group Denial: ‘An Attack on the Indian Enterprise’!

The Adani response to Hindenburg strongly denied all allegations, calling them baseless, but Hindenburg reports do not have a record of false accusations! The Adani reply to the Hindenburg was termed as “an intentional attempt to derail their share price”. In multiple official statements through 2023 and 2024, the conglomerate emphasised that the accusations were politically motivated, recycled, and already dismissed by the courts.

While India’s market regulator SEBI began its own investigations, this report was not expected to sidestep allegations. Over time, SEBI dismissed several of Hindenburg’s claims, citing a lack of evidence of fraud or manipulation from the research company. However, certain aspects of the probe, such as insider trading and public float violations, remained under review, keeping the matter active and closely watched across financial and political circles.

Interference of the SECURITIES AND EXCHANGE BOARD OF India (SEBI): The Final Court Order of Adani-Hindenburg Review Petition

The SEBI final order in the Adani-Hindenburg review petition focused on alleged related-party transactions routed through Milestone Tradelinks Pvt. Ltd. (MTPL) and Rehvar Infrastructure Pvt. Ltd. (RIPL). Hindenburg had claimed that these firms acted as conduits to fund Adani Enterprises and Adani Power, raising questions about the true source of funds and compliance with disclosure norms.

SEBI’s Adani-Hindenburg review petition covered FY 2018-19 to FY 2022-23. The records showed that Adani Ports & SEZ (APSEZ) advanced substantial loans to MTPL and RIPL; amounts as high as ₹11,264 Crores in FY 2021-22. These were then lent onward to Adani Power and Adani Enterprises. Importantly, all loans were fully repaid with interest within the investigation period.

For example, Adani Power borrowed nearly ₹9,655 Crores in FY 2022-23 at 9.25% interest, while Adani Enterprises borrowed up to ₹4,657 Crores in FY 2020-21, again with repayment completed. SEBI verified these repayments against bank statements, leading to the final verdict of accusation dismissal.

Breaking Down SEBI’s Final Order on Adani Group Allegations

The crux of SEBI’s reasoning was regulatory timing. At the time of these transactions, the definition of “related party transactions” (RPTs) under SEBI’s Listing Obligations and Disclosure Requirements (LODR) did not extend to indirect dealings via non-related entities. A broader definition, covering conduit arrangements, was only introduced in April 2023, after the investigation period.

SEBI ruled that applying this definition retrospectively was not legally permissible. Further, Ind-AS 24 (accounting standard) treats “providers of finance” as non-related parties if operating at arm’s length, which exempts MTPL and RIPL from being classified as related parties. Since no investor harm, market manipulation, or diversion of funds was demonstrated, SEBI found no violation of PFUTP (fraud and unfair trade practices) regulations.

In conclusion, SEBI dismissed the allegations, holding that the transactions were legitimate, properly repaid, and did not amount to concealed RPTs under the law applicable at that time.

Adani vs Hindenburg: Final Takeaways and Missed Chances in 2 Years

In conclusion, while SEBI’s final order has cleared the Adani Group of wrongdoing under the regulatory framework, the controversy highlighted a major gap between evolving rules and investigative narratives. Hindenburg’s research has historically uncovered deep-seated irregularities across global markets, building a reputation for forensic precision. However, in this instance, the timing of India’s regulatory changes to ‘related party transactions’ proved decisive. Since the broadened definition only came into force in April 2023, the report’s allegations, analytically sharp, rested on standards not legally applicable.

This created ripple effects. The publication of the allegations without considering the rule-change timeline led to severe stock market fallouts, eroded investor wealth, and may have dented Adani’s global credibility. At the same time, it also left an impression that Hindenburg may have overlooked contextual regulatory boundaries, which in turn affected the firm’s trust among some observers.

A more cautious qualification of its claims after the rule amendments became clear might have preserved investor confidence and avoided unnecessary shocks, while maintaining Hindenburg’s reputation for rigorous, fact-driven reporting. In the end, SEBI’s clean chit shows the Adani-Hindenburg case hearing time was a clash due to evolving regulations, leaving behind lessons for both markets and researchers.