As the Adani-Hindenburg row enters its third week, critics have lashed out at the US based short seller. A variety of allegations against the company’s purportedly ‘fraudulent’ activities have now surfaced on social media platforms – under the trending hashtag ‘HindenburgExposed’. Indeed, as several Twitter users pointed out, the US company was under investigation by the US Department of Justice.
Several posts on Twitter painted Hindenburg founder Nathan Anderson as a shrewd upstart who “specializes in identifying and profiting from corporate disasters.” But as claims and counter-claims take over social media, the facts are a tad more nuanced than Twitter trends would have you believe.
Videos and posts shared under the ‘Hindenburg exposed’ hashtag also noted that the company was known as a ‘ponzi hunter’ – a tag that has also been used by several western media organisations. Social media posts cited a gunfight and four hour standoff with FBI agents at Las Vegas attorney Matthew Beasley (that led to him admitting to a massive ponzi scheme) to underscore their point, albeit in a different way.
As one post put it, they were not specialists who exposed fraudulent activity – “they themselves were frauds.” Is Hindenburg Research under investigation in the US? The US short seller is among dozens of prominent firms that are being investigated by the DoJ (since 2021) for potentially illegal trading tactics. The probe seeks to establish whether short-sellers used illegal trading tactics to drive down stock prices by sharing damaging research reports ahead of time. According to several media reports from last year, federal prosecutors have seized hardware, trading records and private communications as the investigation continues.
Both Hindenburg Research and Nate Anderson feature in the DoJ’s requests for information. It is pertinent to note however that the firm has not been accused or charged with any wrongdoing at present. How do these allegations benefit Hindenburg anyway? Altruistic motivations aside, the current situation can make Hindenburg money. As the Research company noted in its report, it had taken a ‘short position’ in Adani Group companies through through bonds that trade in the US and other investments that trade outside India.
A ‘short’ trade makes money if an investment’s price falls. As such, if the price of a company’s stock or bonds fall because of the negative attention garnered by the report, Hindenburg stands to profit. While some criticise short sellers for ‘unfairly’ pushing down prices with potentially baseless allegations, others insist that they are a healthy part of the stock market.
