Adani slides on report of U.S. regulatory probe over Hindenburg

Investing.com — Shares of companies under Indian conglomerate Adani Group fell sharply on Friday after a report suggested that the firm was facing regulatory scrutiny in the U.S. over its response to a short seller report earlier this year.

Adani Enterprises Ltd (NS:), the flagship firm under the ports to power conglomerate, fell nearly 9%, while Adani Ports and Special Economic Zone Ltd (NS:) lost 4.9%. Adani Power Ltd (NS:) and Adani Transmission Ltd (NS:) fell 5.1% and 7.9%, respectively.

Bloomberg reported that the U.S. Attorney’s Office in Brooklyn, New York, had sent inquiries to large U.S. stakeholders in Adani over how the firm responded to allegations raised by Hindenburg Research in a short seller report released in January.

The short seller report had also attracted a probe from the U.S. Securities and Exchange Commission over representations made to American shareholders, the Bloomberg report said.

In addition to the Bloomberg report, major auditor Deloitte had also recently raised concerns over certain suspicious transactions by Adani Ports, citing some relevance to the allegations raised by Hindenburg.

The news sparked renewed concerns over the allegations raised by the Hindenburg report, which had accused Adani of engaging in improper use of offshore tax havens and stock price manipulation.

Hindenburg said it had taken a short position in the conglomerate through bonds and exchange-traded funds, and also raised concerns over Adani’s extremely high debt levels.

The report had triggered a $100 billion rout in Adani’s value, although shares of the conglomerate have since recovered a bulk of the losses. 

An investigation by the Securities and Exchange Board of India had “drawn a blank” in May, with the probe set to conclude by mid-August. A Supreme Court-appointed panel had also said that its investigation into the firm could be a “journey without a destination.” 

Losses in Adani pulled broader Indian markets lower on Friday, with the falling 0.4%.