India’s securities regulator has begun personal hearings in a long-running enforcement case involving Hindenburg Research, U.S. investment firm Kingdon Capital Management and offshore trading conducted before Hindenburg published its 2023 report on the Adani Group.
The Securities and Exchange Board of India, or SEBI, is seeking to recover gains it alleges were generated from trades made with advance knowledge of the report, according to two people familiar with the matter cited by Reuters. The proceedings could become an important test of the regulator’s ability to pursue overseas market participants and secure assets held outside India.
Trades before the Hindenburg report
SEBI said in 2024 that Kingdon Capital Management built short positions in Adani-related securities through K India Opportunities Fund Class F, a Mauritius-based fund linked to Kotak International, before Hindenburg released its report in January 2023.
Short sellers seek to profit when the price of a security falls.
Hindenburg’s report made wide-ranging allegations about the Adani Group, including claims concerning stock manipulation and accounting practices. Adani repeatedly denied wrongdoing.
Publication of the report triggered a sharp sell-off in Adani companies, at one stage erasing roughly $150 billion in market value.
SEBI’s present case is distinct from the underlying allegations Hindenburg made against Adani.
The regulator is instead examining whether participants in the short-selling transactions improperly traded on non-public information about Hindenburg’s forthcoming report.
According to Reuters, SEBI argues that such conduct could violate Indian rules designed to prevent fraudulent and unfair market practices.
SEBI says six entities made $22.25 million
In regulatory material disclosed in 2024, SEBI described a profit-sharing arrangement involving Hindenburg and Kingdon and said six entities earned approximately $22.25 million from the short-selling transactions.
Hindenburg rejected SEBI’s accusations and denied wrongdoing. It previously described the regulator’s assertions as unfounded.
Kotak Mahindra Bank also said in 2024 that it had no knowledge of Hindenburg’s involvement with the fund and maintained that the relevant investments were handled independently.
SEBI, Hindenburg, Kingdon and Kotak did not respond to Reuters’ latest requests for comment on the current proceedings.
The allegations remain subject to the regulatory process, and the start of hearings does not establish liability.
Personal hearings begin more than two years later
The regulator has now begun hearing representations from the parties involved, more than two years after the original enforcement process started.
According to Reuters’ sources, the delay was partly caused by the time required for the overseas parties to respond to SEBI.
Although the entities involved are based outside India, the regulator believes it has jurisdiction because the disputed transactions took place in the Indian market.
That jurisdictional question is one reason the proceedings could have consequences beyond this particular dispute.
A successful enforcement action would demonstrate how far an Indian regulator can reach when trading takes place domestically but the investors, funds and assets involved are located abroad.
Fight over assets in Mauritius
The case has already extended into Mauritius.
SEBI has opposed court-supervised insolvency proceedings involving K India Opportunities Fund Class F, the fund through which the trades were executed.
The regulator is seeking to preserve assets that could potentially be used to satisfy any future recovery order, according to Reuters.
After learning of the insolvency process, SEBI asked the court-appointed receiver in July to prevent the fund’s assets from being transferred or distributed before the regulator had decided whether to order recovery of alleged gains and interest.
Mauritius’ Supreme Court appointed the managing director of restructuring firm Quantuma as receiver in June to control and protect the fund’s assets.
Quantuma declined to comment to Reuters.
Reuters said it could not determine whether the trading gains had already been distributed or redeemed by Kingdon as the fund’s beneficiary.
That uncertainty is significant because recovery becomes considerably more complex once assets move between jurisdictions or are distributed to investors.
A test of cross-border enforcement
The significance of the case extends beyond Hindenburg and Adani.
Securities regulators increasingly face transactions in which investment managers, funds, counterparties and assets are spread across several jurisdictions while the underlying securities trade on a domestic exchange.
SEBI’s attempt to preserve assets in Mauritius illustrates the practical challenge: a regulator may establish jurisdiction over trading activity in its own market, but enforcing a financial recovery order can require cooperation with courts and institutions abroad.
Reuters described the proceedings as a potentially important precedent for pursuing offshore entities and recovering assets overseas.
The case therefore tests not only SEBI’s interpretation of Indian securities rules, but also its ability to make an eventual enforcement decision effective across borders.
Separate Adani proceedings have already ended
The current Hindenburg-linked trading case should also be distinguished from separate proceedings concerning allegations against Adani companies.
In September 2025, SEBI issued final orders in Adani-related investigations involving transactions with Adicorp Enterprises and with Milestone Tradelinks and Rehvar Infrastructure.
In those proceedings, the regulator found that the allegations set out in the respective show-cause notices had not been established and disposed of the cases without imposing liability.
Those decisions do not determine the outcome of the separate enforcement proceedings concerning the trading activity linked to Hindenburg’s report.
For Hindenburg, Kingdon and the other parties involved, the central issue now is whether SEBI can establish that the disputed trades improperly relied on non-public information — and, if so, whether the regulator can recover the resulting gains from entities and assets located outside India.
Source: Reuters, “India regulator presses ahead against Hindenburg, others in Adani case, sources say,” September 4, 2026.
