Securities and Exchange Board of India (Sebi) and the US based research firm Hindenburg have been entangled in a tussle since Sebi accused the US firm of short-selling Adani stocks prior to and after the release of a report in which they accused Adani of fraud.
The Indian regulator served Hindenburg a show-cause notice, which the research firm rejected and termed as 'nonsense'.
Sebi accused the company of colluding with a US asset manager to use non-public information to set up its short bet against Adani Group last year.
However, in its show-cause notice Sebi has also pointed fingers at Mark Kingdon, the founder and chief executive officer of Kingdon Capital Management LLC.
Sebi alleges Hindenburg colluded with its client Kingdon Capital Management by providing a draft of its report on Adani Group before it was released publicly.
Who is Mark Kingdon?
The investment firm Kingdon Capital Management was established in 1983 by veteran hedge fund manager Mark Kingdon. The firm offers portfolio management, financial planning, and investment advisory services.
A graduate from Columbia college, Kingdon began his career in 1973 as a as pension fund administrator. Later on, he went to join Century Capital Associated.
He started Kingdon Capital Management in 1983 with an initial capital of $2 million.
Money Control reported that by 2007, the firm grew and became a $5.9 billion hedge fund. It was also named as one of the 100 Hedge Funds to Watch.
Allegations by Sebi
According to show-cause notice, Kingdon had a pact with Hindenburg. The research firm was to receive 30 per cent of any gains from trading securities based on its research.
However, for Adani short-selling, they had trimmed down the cut to 25 per cent.
Sebi alleges that Mark Kingdon set up a fund to trade Indian equities known as K Indian Opportunities Fund. That fund created short positions in Adani group stocks between January 10, 2023, and January 20, 2023, five days ahead of the Hindenburg report being published, as reported by Reuters.
According to the Sebi letter, Kingdon begun subscribing into the shares of the fund by the end of December, and in January transferred $43 million in two tranches to build short positions in Adani Enterprises.