India's markets regulator SEBI has started hearing representations as it seeks to recover gains from trades it suspects were based on prior knowledge of Hindenburg Research's 2023 report on the Adani Group. According to reports from Reuters citing people familiar with the matter, the regulator had alleged that U.S.-based Kingdon Capital Management built short positions in Adani-related stocks through a Mauritius-based fund linked to Kotak International before Hindenburg published its report. The case represents a significant enforcement action involving multiple international entities, with SEBI moving forward against Hindenburg and other entities in the ongoing investigation. As reported by The Hindu BusinessLine, the regulator has started personal hearings more than two years later as the parties involved took time to respond, with all parties based overseas but SEBI believing it has jurisdiction since the trades were executed in India.
In 2024, SEBI detailed a profit-sharing agreement between Hindenburg and Kingdon and said six entities gained $22.25 million from short-selling trades. As reported by Reuters, Hindenburg in its 2023 report said Adani Group had violated securities law, triggering a selloff of related shares and a consequent drop in their prices, and wiping out $150 billion in group value. Adani Group denied wrongdoing, while SEBI dismissed Hindenburg's allegations of stock manipulation against the group. The regulator is now proceeding with enforcement actions against multiple parties involved in the alleged scheme. According to The Hindu BusinessLine, short positions refer to selling borrowed shares, buying them back when the share price drops, then pocketing the difference. Hindenburg has previously rejected any wrongdoing and described SEBI's assertions as "nonsense," as reported by Times Now Digital.
According to Reuters, SEBI is proceeding with enforcement, arguing that the trades were based on non-public information and so violated rules aimed at preventing fraud. To secure assets for recovery, SEBI has opposed court-supervised insolvency proceedings in Mauritius for the Kotak fund - K India Opportunities Fund Class F - used to execute the trades. The regulator has asked the court-appointed receiver to ensure fund assets are not transferred or distributed before it orders recovery of alleged gains and interest. As reported by The Hindu BusinessLine, after learning of the insolvency, SEBI asked the court-appointed receiver in the first week of July to ensure fund assets were not transferred or distributed before it had ordered the recovery of alleged gains and interest. Reuters could not determine whether gains were distributed or redeemed by Kingdon as fund beneficiary.
As reported by Reuters, Mauritius' Supreme Court appointed the managing director of business advisory and restructuring firm Quantuma as receiver in June 2026 to control and protect the fund's assets. The case is widely regarded as setting a precedent in the pursuit of offshore entities and the recovery of assets overseas, involving the rare attempt of seeking a stay in a foreign insolvency proceeding to enforce penal action. All parties involved are based overseas, but SEBI believes it has jurisdiction since the trades were executed in India. The regulator's enforcement actions are now moving forward with the receiver in place to protect fund assets, with Quantuma declining to comment when approached for comment. The proceedings are being closely watched for their implications beyond the Adani matter, as the case represents an important test of how Indian authorities can pursue offshore entities and seek recovery of assets located abroad.
