Ingovern backs SEBI notice to Hindenburg; Kotak Mahindra rubbishes claims by the US Short seller

"It is unclear on the reason why Hindenburg has come out so strongly against SEBI, to the extent of casting aspersions on SEBI. Hindenburg has only alienated SEBI and will have to perforce respond to the show cause notice," said Subramanian.

Subramanian further stated that SEBI as a regulator of Indian markets has a right to ask questions to any market participants, and Hindenburg's reaction against the Indian market regulator is uncalled for.

Subramanian further added, "The allegations on Hindenburg, they could be baseless. Only that's the reason why a show cause is sent and it is for Hindenburg to substantiate why it's baseless and respond to SEBI."

"Whether the allegations are baseless or there is any merit to the allegations made by SEBI can't be responded to by you or me, that's for the two parties and SEBI as a market regulator and Hindenburg as a market participant to respond," said Subramanian.

Earlier, Hindenburg Research on a post on his website called SEBI show-cause notice on its 2023 report against Adani group nonsensical and concocted.

Hindenburg has charged SEBI for not naming Kotak Bank which, Hindenburg alleges, "created and oversaw the offshore fund structure used by our investor partner to bet against Adani."

But a spokesperson of Kotak Mahindra International through a press note denies the allegations and said that Hindenburg has never been a client of the firm.

"Kotak Mahindra International Limited (KMIL) and KIOF unequivocally state that Hindenburg has never been a client of the firm nor has it ever been an investor in the Fund. The Fund was never aware that Hindenburg was a partner of any of its investors. KMIL has also received a confirmation and declaration from the Fund's investor that its investments were made as a principal and not on behalf of any other person."

KMIL further added, "K- India Opportunities Fund Ltd (KIOF) is a SEBI-registered Foreign Portfolio Investor and is regulated by the Financial Services Commission of Mauritius. The Fund was established in 2013 to enable foreign clients to invest in India. The Fund follows due KYC procedures while onboarding clients and all its investments are made in accordance with all applicable laws. We have cooperated with regulators in relation to our operations and continue to do so."

Shriram Subramanian also criticises Hindenburg for naming Kotak, "the reference to Kotak seems to be out of place, as Kotak's entity would have acted as a service provider to Hindenburg and its investor clients."

Earlier the Supreme Court gave a clean chit to Adani and instructed SEBI to probe entities involved in short selling. In line with this, SEBI has issued the show-cause notice to Hindenburg. (ANI)