Adani gets SEBI clean chit, but some Hindenburg allegations remain unanswered

On January 24, 2023, Hindenburg Research, a US-based financial research firm and short seller, in a 106-page report, accused the Adani Group of pulling off “the largest corporate fraud in history,” alleging stock manipulation, accounting irregularities, and use of offshore shell companies to artificially inflate share prices. It also claimed violations of public shareholding norms and raised concerns about the group’s high debt levels and related-party transactions. The report alleged that related entities such as Adicorp Enterprises Pvt Ltd, Milestone Tradelinks Pvt Ltd (MTPL) and Rehvar Infrastructure Pvt Ltd (RIPL) were used by the Adani Group as conduits to route funds from various group companies to listed companies – Adani Enterprises Ltd and Adani Power Ltd.

After an exhaustive investigation, SEBI has reaffirmed what we have always maintained, that the Hindenburg claims were baseless. Transparency and integrity have always defined the Adani Group.

We deeply feel the pain of the investors who lost money because of this fraudulent… pic.twitter.com/8YKeEYmmp5

— Gautam Adani (@gautam_adani) September 18, 2025

Of the two SEBI orders, one addressed Hindenburg’s allegations that Adicorp Enterprises was used as a conduit to route funds from various Adani group companies to fund Adani Power Ltd. The second order dealt with charges that Adani Enterprises and Adani Power Mundra Ltd (now merged with Adani Power Ltd) were funded by MTPL and RIPL through Adani Infra (India) Ltd in FY 2020-21.

To investigate if there was a regulatory failure in dealing with the alleged contravention of laws pertaining to the securities market by the Adani Group, the Supreme Court, on March 2, 2023, had set up an expert committee headed by a former judge Justice A M Sapre. The other committee members included former SBI Chairman OP Bhatt, former ICICI Bank Chairman KV Kamath, Infosys Chairman Nandan Nilekani and HC judge Somsekhar Sundaresan.

The apex court also directed SEBI to conclude the investigation and file a status report. The committee, which presented its report dated May 6, 2023, said it found no conclusive evidence of stock price manipulation by the Adani Group but flagged concerns about opaque foreign portfolio investors and gaps in SEBI’s regulatory oversight. It also noted that SEBI had been investigating these issues since 2016 but had made little progress in reaching definitive findings.
After completion of investigation, SEBI issued a show cause notice (SCN), dated January 15, 2024, to Adani group firms and officials based on findings of investigation.

SEBI’s order silent on some serious accusations

The two SEBI orders focus largely on related-party transactions while staying silent on several other serious allegations levelled by Hindenburg, including low public float, suspicious FPI activity, and Vinod Adani’s offshore links. According to Hindenburg, these were part of a scheme ‘designed to prop up Adani group’s stock prices and financial strength’. According to some experts, SEBI’s silence on these aspects leave some questions unanswered. While the SEBI order reveals many things, it also leaves out multiple contentious issues, according to analysts who spoke on condition of anonymity.

“This is a partial relief for the group as the two orders address only the issue pertaining to related party transactions. Presently, there is no clarity on the status of the other allegations raised by Hindenburg and whether SEBI has been investigating them,” said a legal expert.

In an order dated January 3, 2024, the Supreme Court noted that SEBI had completed 22 out of the 24 investigations into the allegations levelled against the Adani Group. The apex court also directed SEBI to complete the two pending investigations expeditiously within three months.

After concluding its probe, SEBI issued a show cause notice (SCN) on January 15, 2024, to Adani group firms and officials.

Last year, a few of the Adani Group companies including Adani Enterprises, Adani Green Energy Adani Power, Adani Energy Solutions and Adani Total Gas received show cause notices (SCN) from SEBI during the quarter ended March 31, 2024, for violations of certain regulations, including non-compliance of listing and related party transaction norms. Adani Ports and Special Economic Zone said it received the notice from SEBI during FY24.

“During the quarter ended 31st March 2024, the Parent Company has received two show cause notices (SCNs) from the SEBI alleging non-compliance of provisions of the Listing Agreement and LODR Regulations pertaining to related party transactions in respect of certain transactions with third parties and validity of peer review certificates of statutory auditors with respect to earlier years,” Adani Enterprises said in an exchange filing on May 3, 2024.

“Earlier in April 2023, the Parent Company had undertaken review of transactions referred in SSR (short seller’s report (Hindenburg)) through an independent assessment by a law firm, which confirmed that (a) none of the alleged related parties mentioned in the SSR were related parties to the Parent Company or its subsidiaries, under applicable frameworks; and (b) the Parent Company is in compliance with the requirements of applicable laws and regulations,” it had said.

While giving a clean chit to the Adani group, the regulator made it clear that none of the charges in the show cause notice could be proved. It also confirmed there was no violation of the SEBI Act concerning fraudulent or unfair trade practices. The alleged transactions were deemed genuine business dealings and not fraudulent or violative of RPT disclosure norms, given the legal framework applicable during the investigation period, SEBI said in two separate orders. At that time, SEBI’s definition of related-party transactions under LODR regulations did not cover such indirect transactions. The broadened 2021 amendments, effective April 2023, were prospective, not retrospective.

The minimum public shareholding issue

One of the most serious allegations raised by Hindenburg was that several Adani Group companies violated SEBI’s minimum public shareholding (MPS) norm, which requires at least 25 per cent of shares to be genuinely available for public investors. The report claimed that a significant portion of shares shown as “public” were, in fact, controlled by opaque foreign entities with close links to the Adani family. If correct, this would mean that the true free float in these companies was much lower, helping keep stock prices elevated and shielding them from genuine market discovery.

Despite the gravity of this allegation, SEBI has refrained from making any adverse remark on the matter, leaving a major question mark over compliance with one of its core regulations, said an analyst who preferred anonymity.

Questions on FPI stakes in Adani companies

The Hindenburg report also alleged a cluster of Mauritius-based and other offshore foreign portfolio investors (FPIs) that held unusually high stakes in Adani’s listed entities. These FPIs were accused of functioning like shell entities, lacking independent business operations or diversified portfolios.

Such a pattern raised suspicion that they were not genuine investors but fronts to channel Adani’s own money back into its companies, artificially inflating valuations and stabilizing stock performance. Among the funds named were Elara India Opportunities Fund, Cresta Fund, Albula Investment Fund, and APMS Investment Fund. Yet, SEBI’s orders have offered no clear observations or findings on these issues, even though the presence of such concentrated holdings strikes at the heart of market transparency.

Vinod Adani’s link to offshore entities

Perhaps the most pointed allegation concerned Gautam Adani’s elder brother, Vinod Adani. Hindenburg accused him of running an intricate network of shell companies across tax havens including Mauritius, the UAE, Cyprus, and several Caribbean jurisdictions. These offshore structures, it said, were used for stock parking, manipulating shareholding patterns, and routing funds back into Adani firms to inflate revenues and mask debt.

The report went so far as to describe Vinod Adani as the “key conduit” for moving funds in and out of the group. Surprisingly, SEBI’s orders do not even mention his name.