SEBI Clears Adani Group of Hindenburg’s Insider Trading and Fraud Allegations

Regulator Finds No Evidence of Wrongdoing, Upholds Adani’s Claims of Transparency in Multi-Year Probe

NewsArc Bureau

Mumbai, September 18, 2025 – In a major relief for India’s largest infrastructure conglomerate, the Securities and Exchange Board of India (SEBI) has issued a clean chit to Adani Group Chairman Gautam Adani, his brother Rajesh Adani, and key entities—Adani Ports & SEZ, Adani Power, and Adicorp Enterprises—dismissing allegations of insider trading, market manipulation, and related-party transaction (RPT) violations leveled by US-based short-seller Hindenburg Research in January 2023. The decision, detailed in two separate SEBI orders, marks the culmination of a nearly three-year investigation, reinforcing findings from a Supreme Court-appointed expert panel that found no prima facie evidence of wrongdoing.

The Hindenburg report, which accused the Adani Group of orchestrating “the largest corporate fraud in history” through stock manipulation, accounting irregularities, and offshore shell company misuse, triggered a seismic $150 billion market cap plunge for the conglomerate, with flagship Adani Enterprises plummeting 70% in early 2023. SEBI’s exhaustive probe, however, found no substantiation for these claims, declaring the impugned transactions as legitimate business dealings compliant with the regulatory framework at the time.

Hindenburg’s Allegations and SEBI’s Rebuttal

Hindenburg’s January 24, 2023, report alleged that the Adani Group used entities like Adicorp Enterprises, Milestone Tradelinks (MTPL), and Rehvar Infrastructure as conduits to channel funds between listed companies—Adani Ports, Adani Power, and Adani Enterprises—without proper RPT disclosures, thereby artificially inflating share prices and violating public shareholding norms. Specifically, it claimed that Adicorp, despite its modest financials, received ₹620 crore in loans from four Adani companies in 2020, with no disclosure in their financial statements. Hindenburg argued this would take Adicorp “900 years” to repay without interest, hinting at fund siphoning.

SEBI’s investigation, led by Whole-Time Member Kamlesh Varshney, systematically dismantled these charges. The regulator’s orders, issued on September 17, 2025, clarified that the transactions involving MTPL and Rehvar were genuine, interest-bearing loans, fully repaid before the probe began, with no evidence of siphoning or diversion. Crucially, SEBI noted that the definition of related-party transactions under the Listing Obligations and Disclosure Requirements (LODR) Regulations during FY 2018–23 did not cover such indirect transactions. The expanded LODR amendments, effective April 2023, were not retrospective, rendering Hindenburg’s claims legally baseless.

The show-cause notice (SCN) issued to Adani entities and officials, including Gautam Adani, Rajesh Adani, and Group CFO Jugeshinder Singh, alleged violations of directors’ duties and LODR norms. However, SEBI found no evidence of deliberate concealment or fraud. “The allegations in the SCN are not established,” Varshney wrote, adding that the transactions did not violate SEBI’s Act on fraudulent or unfair trade practices. The absence of concrete evidence beyond non-classification of transactions as RPTs led SEBI to conclude no penalties or further action were warranted.

Adani’s Response: A Call for Accountability

Gautam Adani, in a post on X, hailed SEBI’s verdict as a vindication of the group’s “transparency and integrity.” He expressed sympathy for investors who suffered losses due to the market crash following Hindenburg’s report, calling it “fraudulent and motivated.” “Those who spread false narratives owe the nation an apology,” Adani stated, reaffirming the group’s commitment to India’s institutions and nation-building. The Adani Group had consistently denied Hindenburg’s allegations, labeling them a targeted attack to destabilize its market standing.

The SEBI orders align with a January 2024 report by a Supreme Court-appointed committee, headed by former judge A.M. Sapre, which found no regulatory failure or evidence of stock manipulation by the Adani Group. The panel’s findings, combined with SEBI’s closure of the case, have bolstered the conglomerate’s position as it rebuilds investor confidence.

Hindenburg’s Retreat and Market Impact

Hindenburg Research, whose founder Nate Anderson announced the firm’s “disbandment” earlier in 2025, has not issued a public response to SEBI’s orders. The short-seller’s report had sparked global scrutiny, with opposition leaders in India, including Congress’s Rahul Gandhi, amplifying calls for a joint parliamentary probe into alleged regulatory lapses. However, SEBI’s clean chit has shifted the narrative, with analysts predicting a positive uptick for Adani stocks, which have already recovered significantly since the 2023 lows.

The investigation scrutinized transactions from FY 2018–23, a period when Adani Group’s rapid expansion into ports, power, and green energy drew both admiration and skepticism. Critics had pointed to the group’s high debt levels—highlighted by Hindenburg as a risk—but SEBI’s findings focused solely on regulatory compliance, not financial health. The orders noted that while certain governance practices raised concerns, they did not breach the legal threshold for fraud or manipulation under the then-prevailing rules.

Broader Implications for India’s Regulatory Landscape

The Adani-Hindenburg saga has reignited debates over corporate governance and regulatory oversight in India’s capital markets. While SEBI’s decision closes a contentious chapter, it raises questions about the adequacy of pre-2023 RPT norms and the challenges of regulating complex corporate structures. The regulator’s emphasis on the non-retrospective nature of LODR amendments underscores the need for proactive reforms to address evolving financial practices.

For the Adani Group, the clean chit is a significant milestone, potentially paving the way for new investments and global partnerships. However, the episode’s fallout—investor losses, political slugfests, and international scrutiny—continues to cast a long shadow. As Gautam Adani emphasized, the group’s focus remains on resilience and growth, but the call for an apology from detractors signals a combative stance as it moves forward.

With SEBI’s verdict, the Adani Group emerges stronger, but the episode serves as a cautionary tale for India Inc., highlighting the delicate balance between aggressive expansion and regulatory compliance in the global spotlight.