The Cārvāka Podcast

Hindenburg Vs Adani

In this podcast, Kushal speaks with Ajay Rotti about the latest report by Hindenburg that made specific allegations against the Adani group.

Follow Ajay: Twitter: @ajayrotti

#hindenburg #adani #SEBI

Listen to the podcasts on: SoundCloud: https://soundcloud.com/kushal-mehra-99891819 Spotify: https://open.spotify.com/show/1rVcDV3upgVurMVW1wwoBp Apple Podcasts: https://podcasts.apple.com/us/podcast/the-c%C4%81rv%C4%81ka-podcast/id1445348369 Stitcher: https://www.stitcher.com/show/the-carvaka-podcast

Support The Cārvāka Podcast: Buy Kushal's Book: https://amzn.in/d/58cY4dU Become a Member on YouTube: https://www.youtube.com/channel/UCKPx... Become a Member on Patreon: https://www.patreon.com/carvaka UPI: kushalmehra@icici To buy The Carvaka Podcast Exclusive Merch please visit: http://kushalmehra.com/shop

Follow Kushal: Twitter: https://twitter.com/kushal_mehra?ref_... Facebook: https://www.facebook.com/KushalMehraO... Instagram: https://www.instagram.com/thecarvakap... Koo: https://www.kooapp.com/profile/kushal... Inquiries: https://kushalmehra.com/ Feedback: kushalmehra81@gmail.com

Duration:: 57m
Broadcast on:: 14 Aug 2024
Audio Format:: mp3

Now let's say everyone, welcome to the Charvak Podcast. This is your host Kushal Nahra. I want to begin today's podcast by wishing everyone a very happy good written stay, 14th August. His son was created as we say in Hindi, Punjabi, Pindachuta. So yes, Punjabi's lost lives and many others lost lives, but in hindsight, good riddance. And today's podcast is not about 14th August. Today's podcast is about something that has been in the news for a few days. If you guys don't know, Hindenburg released another report. This time a second report about the Adani group and there has been a lot of back and forth. And this time they have made some serious allegations. Now I did not know what to make of it. And then I saw Ajay making a lot of points on this. Ajay had even gone on NDTV and many other platforms to explain this. And he was also explaining this on social media. I've been looking at Ajay's work for a while. So Ajay, welcome. And this is your first time on the podcast. So can you tell everybody a little bit about yourself, your background, so that the listeners and viewers know a little bit about you too? Sure. So I'm from Bangalore, being here all my life. We now are tax-consultant, tax-advisor for the last 20 plus years, a chartered accountant by qualification, and more importantly of through Bangalore, never lived in any city other than Bangalore, it's a rare commodity in this part of the country. So that's about me. Enjoy tweeting. Tweeting is a help to get a side of me which surprises me sometimes myself. Yeah. No, we all surprise ourselves in that sense when it comes to Twitter. But can we start like this? Can we actually steal man the case? As in put the case on behalf of Hindenburg first, that what is Hindenburg actually accusing? Because if the accusations that are being made by Hindenburg are serious, then this actually is a matter of grave concern because at least when it comes to the RBI and SEBI, these are really respected institutions in India and they are usually known in fact, I mean we have common friends, Harsh, Harsh is a common friend of both you and I, and something that Harsh, I know Harsh, Rajiv, all of us, you know, we keep whining about this. Oh, RBI doesn't listen to the government, RBI just is in a world of its own. They do what they have to do and then something like this comes. And Harsh has been very harsh on SEBI too on many occasions on his public statements. So when something like this comes, my first request to you is even if it takes some time to explain what the Hindenburg accusations are first. Sure. And I completely agree with the points you made on both RBI and SEBI. I've dealt with multiple regulators in my career and nobody comes as close to RBI and SEBI in terms of sort of doing their role in an absolute no-nonsense approach. Sometimes come across as not regulators with a soft touch and particularly important because of the areas that they deal with, which is far in exchange and investor protection. So, you know, I think they are doing a fantastic job and keeping that aside, let me just move to Hindenburg. So when we have to look at Hindenburg and before we sort of get to the allegations and the reports that they have put out, very important to know who they are. And that background gives a lot of context to what they are doing. So they are not for profit, they are not a civil society organization looking at financial frauds or any of that and they don't claim to be one. What they do is deep throw research and there can be two ways on what their credibility is today after some of these reports and we'll discuss that as we move along. But what they do is deep research on companies which they believe are overvalued or which they believe have certain issues which is not in the public domain, but data to arrive at those conclusions are actually in public domain. So they don't sort of do any, you know, insider information in that sense, do research. They advise their clients and people who follow them and people who they work for to take short positions. So what's shorting a stock, essentially selling it without having the stock. Therefore, you sell it today and then with the hope that the price will fall and you can buy it back and make that profit. Therefore, they are short sellers. They've been awarded as the best short sellers of few years. This is what they've been doing. They've done this very well in some of the US stocks actually to pick up issues, do research, put out a good research report, which actually show what the issues with the company are. And they call themselves Hindenburg because of the famous Hindenburg explosion and, you know, they believe that there are a lot of Hindenburgs which are flying, which are just about to explore and that's the background that they give for themselves. So we need to remember that these are, you know, professional short sellers. They are not here to correct our system. They're not here to make the financial markets better in different parts of the world. No, that's not what they're doing. So these, they picked up a darling for a reason that they believe that there are some fundamental corporate governance issues and there are issues, how the companies run and therefore there is a scope for the prices to fall if certain of these things are brought to public domain. So they first came out with their first report in Jan 23. And what we are seeing today is their second report. And in terms of allegations, the first one had more damaging allegations and I will lay out what the difference between the two are. The first report in Jan 23 basically said that this is almost a scam and a financial bubble in terms of asset prices, they are artificially high because there are multiple things that Adami has not done right and you know, whether it is governance, whether it is, you know, related party transactions, pricing, tax issues. So they laid out a whole host of things. And one of the important things was that Adami is probably not adhering to the minimum public float, which is any listed company needs to have at least 25% shares with the public and promoters can't be controlling. And they believe that that 25% is artificial, there are some cross holdings because of which the prices have artificially been driven up. So in summary, the Jan 23 report said there are too many things wrong with Adami and therefore they believe that the price has to be corrected. And then the price fell, this was just before a fall on public offer that Adami was planning to do and they had to withdraw that. And then as expected, most times that should be happening now locally, our political situation here. People went to the Supreme Court to say that there has to be a special investigation team. This has to go to CBI and SEBI is not doing enough and so and so. So Supreme Court took its time, set up its own inquiry, called SEBI, asked them what they are doing, SEBI said they are indeed investigating some of these even before the Hindenburg report and they said there are 24 investigations that were on way, of which 22 have been completed and there's short time for the rest of it. And about roughly a year after that, Jan 24, but seven, eight months before today is when Supreme Court said that SEBI is the only authority who can investigate these things. It is no need for a CIT, there's no need for anybody else to be looking at it, no CBI, etc. SEBI is doing its job. Yes, it's taken time, but then SEBI has to do this and complete it and give that report. Now this was ongoing, SEBI has sought extension, etc. And we'll come to why and what SEBI is doing after this brief introduction. Jack, June 24 is when something very important happened, June 24, SEBI actually showed us a show-cause note is to Hindenburg themselves, because SEBI said, you've got your clients to sell stocks, take short positions before you shoot the report, and thereafter you shoot the report and we believe that there are some non-compliance and violations of Indian securities law and therefore explain what you've actually done, what your clients have done, etc. Very interestingly, Hindenburg literally thumbed their nose at SEBI to say that you can't be shooting this show-cause, you're not doing your job, you should have been investigating and you can't today come and ask us and they put out the entire show-cause notice on their website, they put responses to that rather than responding to SEBI. So there were two investigations in that sense, one against Adani on the first set of allegations that Hindenburg made in '23, second on Hindenburg itself. The latest report that's been released very interestingly has very little to do with Adani. Well, they use the thread, they say, you know, they give the background and all of it, but the entire thing is actually an allegation about SEBI chairperson. So the current report basically says, there are three issues, large ones with the SEBI chairperson, and therefore SEBI is not doing the right job. First one being that the chairperson and her husband are invested in certain companies outside India, which allegedly hold Adani shares. Then one being that the SEBI chairperson has consulting income services companies where she's earning income and therefore is compromised. And number three being that SEBI chairperson's husband is an advisor to Blackstone and then there have been some law and changes in regulations that have been made to suit only Blackstone and therefore all these establish that the SEBI chairperson is not independent, is not functioning as a fair regulator and they leave it at that. So basically the second set of allegations are all about the SEBI chairperson, nothing to do with Adani and they only link it to say that she is not or SEBI is not moving ahead with the Adani investigation and coming out with the report because of all these conflicts and independence issues with the SEBI chairperson. That's where we are today. After SEBI has come out with a response to say that their investigation is ongoing, they have examined 12,000 pages of paper, you know, called thousands of people on someone's recorded statements and when the investigation is complete they'll come out with the report and that's how SEBI works and therefore Adani has not been given a clean sheet as yet investigations are ongoing and they have reiterated that Hindenburg has to respond to their show costs and that's SEBI's, you know, so to say the last word or the latest statement on this and this is where we stand in the entire Hindenburg, Adani's saga has been going on for about one and a half years now. So in short from how I have understood this, what Hindenburg and its report is alleging is that the SEBI chairperson, the current SEBI chairperson is not the perfect person to actually investigate any of the things that have been alleged against Adani is because they are directly invested in the entire process and the next follow up question naturally would be the specific evidences that they have provided. So what are the evidences? So the evidences and that's where I think the second report is actually not as credible and solid as it appears and as it is made out to be. So for the first one they just say that there is an offshore fund that IIFL as a company used to run and that's the company in which Gautam Adani's brother has invested in that money has made its way through to the Adani group. And the fund in which the SEBI chairperson and her husband have invested is also the fund by IIFL. Now that's the only thing they have said they have not proved or they have not provided any proof for the funds actually going to Adani or the fund holding Adani shares. They only said it's the same company which manages both the funds therefore there could be a possibility that these are interconnected. Interestingly, IIFL again is a listed company and they have come out with their filing with a stock exchange to say that the fund in which the shear person and her husband have invested have never ever dealt with any security belonging to the Adani group and those have been different and within months of her taking over as becoming a part of SEBI they have actually redeemed those units and they were forming one and a half percent of the total capital of that fund and therefore they couldn't have influenced any decision as to where the money had to go. So in terms of the proof that Hindenburg has provided in my view having gone through some of these and what is in public domain I don't think they have been able to make even a prima basic case that there's actually a conflict and the SEBI chairperson is indeed invested in some of the Adani companies directly or indirectly. That's my view on the first allegation alone. But what about the dates there was some conflict about the dates they say somebody they joined at X year but before joining she had already resigned from all the post like what is the first about the dates I'm not able to understand that dates but yeah so that is important I'll tell you the reason is the current SEBI chairperson is the first one who is a lateral higher road coming in from the non-government background so until you know the current chairperson assumed the role we had only had mostly IAS officers and some of them from other government organizations like IDBI etc becoming the chairperson of or the chairman of SEBI incidentally she's the first lady to be holding this post. So somebody who came from outside the two dates that are indeed confusing is because before becoming the chairperson she was a whole time member of the SEBI board so there's a point when she was admitted to the SEBI board and she was just a board member and thereafter she became a chairperson. So none of these transactions are after she's become a chairperson but some of them are between that intervening period where she was a whole time member but not a chairperson. So then what is the first about like I'm not able to understand yeah so on purely the holding of shares indirectly in Adani I don't think there's much that they've been able to make out in fact their response to her response doesn't even talk of it much. So I think on the first allegation alone which is to say that you know they were invested in a fund which is invested in Adani I think that's sort of been almost conclusively debunked. I don't think that is something that they've been able to establish even as a prima afresi thing. Okay so I'm just trying to read so what they so what some people are saying the SEBI chief should have recused herself from the Adani investigation is what some people are accusing the SEBI chief of that she has not recused herself is that is that the real story? Yeah so that's the ask that some of the people have had to say that if indeed she was having these conflicts she should have recused herself. Now what is also to be noted is SEBI as an organization has a model code of conduct of conflict for all its whole time members including the chairperson where they are supposed to disclose companies in which they had shares and if any matter relating to that does come up they're required to not participate in it etc but here she never had any investment in Adani or directly or indirectly or any of those things when the investigation started off work ongoing. Now if she did have a long time back when she was actually a private citizen or nothing to do with SEBI or did not have a influencing role in SEBI is that a reason enough for her to be recusing and is there actually a conflict today is the question that needs to be seen but the people who are you know asking for this are really asking a basis that that the normal governance you know principles any of the corporate governance principles you take leaving all these issues aside is if you are a party who is in conflicted who has some other you know motives for investment you need to be stepping aside or you need to be recusing yourself from that matter and not be taking decisions on this even if your official role requires you to take a decision on that you should be leaving it to others. But I think that's a fair demand right on the face of it I don't see any problematic thing in that like what is so definitely there's there's there's nothing problematic in that provided you actually are conflicted because if you are conflicted then you need to be staying out the question that we need to be asking is is this chairperson conflicted at the time of those investigations and decisions now you know if you were invested in a mutual fund and that mutual fund had stake in some company you had no decision making you had no powers to influence where the mutual fund invested its money are you said to be you know conflicted because of indirect holding firstly this indirect holding was long time back and she redeemed it these are the questions and I don't think you know on the principles of corporate governments there's any doubts that if somebody is conflicted they ought not to be setting a decision making the question that we need to be asking is is she actually conflicted or was she conflicted when she took some of these decisions hmm so I just want to read something that the wire has written now somebody was like oh my job is to read every single media portal whether it's the wires scroll news laundry swaraj or anything in fact that is something that I do with which is how you actually try to understand the subject better is if you read everybody so the wire has written this I'm gonna this is more informative than accusative I would say so that this says basically it is two of the sebi chief for consulting from one is agora advisory which is based in India agora advisory and one is agora consulting which is based in Singapore this has come in the limelight on august 10th with the Hindenburg report now what they are reporting is along with our husband double butch they are invested in controversial offshore funds linked to the adani siphoning scandal and by the way wire says they have not denied this allegation right wire is quoting exactly the Indian consulting firm was set up by madavi before she assumed the post of sebi's chairperson according to the documents from the registrar of companies agora advisory was incorporated on may 7 2013 with madavi as one of the two directors the firms in corporations certificate mentions an address in ghatkoper east the auditor of agora advisory a chartered accountancy firm called shayan sabla llp is registered at the same address according to its filings according to her report two other firms founded by madavi rnaira impact solutions private limited and rnaira development foundation also have the same address she resigned from their boards before joining sebi in 2017 double butch has been a director in these firms since 2017 now if she has resigned then what is the problem yeah so i'll tell you what the issue here and what they are trying to you know the agora bit is there in the Hindenburg report as well so what they are alleging here is she's probably holding you know another business interest where there is consulting income again we need to remember that she's come from the outside she's not been in the system she's not a bureaucrat and you know bureaucrats all the civil servants have service rules and you know restrictions on business restrictions on having other income transactions etc she was a successful professional top of the game with the couple they've had a long stand they've been outside India for a long time therefore they had a company outside India in India for consulting income so they were earning consulting income in these companies the moment she came on board to sebi she actually you know stepped down and transferred and it is her husband's company is her side of the story now what she says is these are independent these have become dormant etc now i think this is where there's a need for some more answers to come out some of facts has to come out without a doubt because the allegation and there we need facts to see whether it is substantive or not is what is the income that this company is earning who is paying this consulting money to them and to just you know like you started the conversation if you were to just put credence into what the other side is saying against the sebi chief what they are saying is if there's a consulting company which has x, x, x cross whatever the number would be not relevant has consulting income what if that money has actually come from somebody related to the person being investigated therefore they are compromised we have no idea where that money comes from we have no idea what that income represents or where it is where the source is and therefore she ought not to be having any other consulting income now she said that she stepped on those companies have become dormant but there's still some income that is shown by these companies which are owned by her slash her husband i think the right approach here and maybe we'll get there but we need to wait and see is for her to disclose as to what are these transactions where are these income coming from now if these are consulting income a husband is a senior professional again with wealth of experience he's been a consultant he's offering services to unrelated companies nothing to do with his investigation and those are the companies which have paid this income i don't think there's a conflict but we really need more information as to what this income and what these companies are actually doing before we can rule out a possibility of there being a conflict on this second issue fair enough so the wire further states that the documents filed with the registrar of companies also revealed that madaby had 99% stake in agora advisory until late as march 2024 even though double had replaced her as a director in 2017 the firm was active between 19 and 24 and has made 3.63 crore in revenue from its operation according to the scroll Hindenburg research such a august and revelations also said that the firm had reported a revenue of 1.98 crore in 2122 more than four times butcher's salary as a sebi chess presidency now this is something very silly like what does butcher's salary got to do with what are the revenues of the firm like this is just innuendo and leading like i don't understand agree that's where you know i i think see which is where we go back to the intent and why Hindenburg is doing and you need to remember that if the more sensational than use is the more the market reacts therefore yes some of these are built on facts connecting numbers which really don't make sense and the one that you picked up is absolutely right as in what is how many whatever the factor of the salary how does it matter if that consulting income is right if that consulting income has come from unrelated parties it should not matter whether it's one crore or 10 crore or 10 lakhs or 5 lakhs but on this fact alone on this allegation alone i think we need to get some more information and there should be some disclosures that need to be made as to what this income and what this company will actually doing and and in the later years 23 24 if i remember the numbers right you know the revenue from operation was some six lakh rupees or something like that so it could be any of the income that they have earned but there is definitely a need for the chairperson and husband actually disclosed as to what these income represent and who it comes from yeah so basically this is the allegation so what are the adani related allegations against the butch as per scroll the Hindenburg report says that in December 23 an investigation by the nonprofit adani watch claim that a firm called global dynamic opportunities firm based in the tax haven Bermuda was one of the entities used by the ad by adani group chief gotham adani's brother vino the adani to allegedly manipulate the stock market in turn global dynamic opportunities fund invested in ip plus fund one a fund registered in Mauritius another tax haven country the investigation showed the Mauritius fund then invested in the indian financial markets citing documents obtained from a whistle blower Hindenburg has claimed that madavi and double butch first invested in ip plus fund in June 2015 this was be where before madavi butch was appointed a whole time member of the sebi of india in 2017 if she has invested before she was a sebi chief why is anybody concerned about what is happening again what is the problem here i am reading verbatim what scroll has written absolutely those are satram a joint yeah this is from 2015 what does one got to do with other like i am no family member of madavi butch i don't care i don't know her yes and and also important is in 2018 it's got redeemed it becomes even better because in 2018 it's got redeemed now in 15 if she invested i think people who are having a professional you know they're having an independent carrier and who gets called by the government i don't think in 15 she would have even had an idea that she would get a call from sebi she would be with sebi and at some point she'll be investigating a dollar now what is worrying for me personally on some of these is you know we should not end up throwing the baby with the bath water here we really need to get to the bottom of this no doubt i'm not for a minute discounting that or being flippant about the allegations made but the question is if there is a professional who's coming as a lateral and i think that's a good thing that's been happening in this government you've actually she understands the market she's been in the market she's been she understands different things and different aspects of the market rather than somebody being just air drop from outside the sector so if you want people like that to be coming in into the government and helping the government with important roles like this should you actually be getting into these kind of issues to say some two years before she actually took up the government assignment she had an investment this is so common in us but you know forget uh roles like these treasury secretaries have come from the uh wall street there they sell their stock before they come in there's in fact a tax extension from some of those they would have held multiple things you know even today in the current uh you know uh government setup in the u.s as well there are people who've been successful outside and your Trump himself was there had a business had shared and tomorrow could you have said that before he became the president some three years back something was done of course some of those allegations are there but how do you see this according to me if you want more lateral hires you want good successful private professionals coming in making the government things better we need to be taking a slightly different view on some of these uh you know u.s has certain other things where you actually can put all your investments into a trust and then you pick it up once you go back after your government work until that you have no say you have no control over those things those are the things that we need to be facilitating uh you know i know that lateral hires in even uh you know uh the finance ministry etc they have people who moved in from successful business roles shattered account and so what today sitting in uh MOF as uh joint secretaries under secretaries etc i think we need more of that i don't think that should be a casualty of what's coming out here while our investigation has to happen you can't you can't just assume and presume guilt from the world go this is my biggest fear Ajay and i'm glad that you have raised this because i am not saying what mr and mrs. butch have done i'm not aware of i i do i did not even know what they who they were what they were until this entire you know saga has unfolded in the last few days i honestly did not know the name of this abi chief i could care less air mira kalena denam maithwek average indianum bhuja kalena dena sebi jithi but the point is that it saddens me because you know this just strengthens the babu's case of running sebi and rbi as a fifth of the babu's because what the babu's will do is see you got a lateral entry see these lateral entry people come with all these kinds of springs attached and and and mark my word Ajay as someone who has friends in the government all governments by the way i know how much resistance lateral entries i'll give you an example Ajay so we have the this category called officer on special duty everybody knows about it take osd's are usually these professionals right who are gotten from outside brought inside governments and at multiple whether it's at the state level we have osd's whether if it's at the central level we have osd's and osd's are resisted tooth and nail by the carter the the babu carter the osd's come from a very corporatized world a very corporate background a very corporate mindset and the babu dumb hates them with a passion this is not a pitch for mr and mrs much this is a pitch for the concept of lateral entries and what i worry is and this is the typical communist mindset of the average indian intellectual they hate this the we tried and and i'm and i'm so happy you brought the american example or a yar if we actually look at americana then everybody has a conflict of interest from top to bottom everyone are a yet jd van ski story study karo jd van kaase from where jd started he was hired by x he has worked in ferns and many other companies then he enters politics so mata koi very has a tough business world where politics may be and and also you need to remember one other thing related to this and you know i'm now making allegations and accusations as widely as hindenburg has that a lot of this has come out from visual bluish so i won't personally rule out of internal sabotage in terms of some of this being shared because hindenburg does say that some of these uh you know emails uh filings that have been made are from visual blower so who knows there could actually be a good disclosure by the sebi chief two people in sebi and these are actually documents available there because she is the first person from outside the bureau cressy to come in and take this position at sebi which is a really powerful position the next thing that i want to talk to you about is how much of this is geo-political because how much of this is interference in our markets and trying to destabilize our markets and through our markets our economy let's not beat around the bush the indian stock market has been giving on average even in the worst case scenario in mutual funds a return of 12 to 16 or 18 or 20 percent on average is since the last five years at least and if you look at the decade-long uh performance it's been average of 13 to 17 percent we are one of the best performing stock markets in the world if you were invested in the indian stock markets in the last decade and you are a long time holder you have made a killing let's not beat around the bush everybody has made money in the indian stock markets and i sometimes feel some people in the west as much as they like india to prosper they really don't like india to prosper so much and this is a subtle way of hitting at us it could be you can't pull that out at all uh you know because this is actually being done from outside the shores and what is actually making a difference this time and i'm no expert in the uh market uh dynamics but from whatever little i can understand that there is actually a increased investment from the domestic investors the sell piece that are happening etc therefore i don't think it's so easy to set outside and influence uh the markets uh anymore and also you've seen how after the second report has come i think there's been uh not much of a uh annex selling across the board etc and things like that but uh would i rule out or as an indian would i put it beyond uh my imagination to say that something like this could have happened differently not as somebody who's a patriotic wants to see the company a country do well and happy about where we are in the last many many years i think if someone is trying to do this to uh derail our markets and therefore the economy i won't rule that out it's it's not a while thought it's there could be some truth in that so how what do you make of the market response it was obviously a damn square if the market did not give a damn about these allegations so let's talk about that a bit why do you think that happened so i think see the first time they came out with the allegations there was a clear drop uh adani also reacted differently they withdrew their fpo that was there etc and i think there was some time for people to digest what would actually come out what happened at the supreme court what sebi was doing and the market including the adani stocks bounced back adani stocks didn't get back to the old levels but they did bounce back this time around i think what happened was the whole allegation was around sebi chief and uh you know the amount of work that she's done uh within the uh you know market uh participants the knowledge that is there i think that her credentials and her reputation was good to be just solid by this kind of a much lending therefore over the weekend if you saw any of the people who mattered for the markets the analysts the top investors people who advise not really the influencers on you know instagram and telegram etc but the people who matter all came out in one voice to say that you can't be doing this and this can't be true and you can't be taking these kind of allegations you know there's no truth in this etc you know amf either mutual fund association etc came out with statements so they were there was amongst the people who mattered there was a clear message that you know this is there's absolutely no truth in this yes there could be a need for investigation but it's not that bad and it's not what they are making out there is no systemic risk there is no larger problem in the market because today they were hitting at the market the second report was not about one stock the second report was not aimed at bringing adani stock down the second report was aimed at telling that your market regulator is compromised your market regulator is not independent therefore there's a larger problem that you have and therefore you know I think the response from where I see was good was mature I don't think our market is as they expected that they'll be across the board panic selling whatever I've seen and there's no official statement official confirmation the instrument that they were holding to make money to short was also on the entire market not on the adani stocks therefore they were expecting all around you know across the board selling across the board panic which did not happen and what do you make of a response of a certain section of our society whether it's the political class or the comment area I mean it hurts me because at the end of the day listen full disclosure I live outside India half the year but I still 100% of my investments are in the Indian market that's how much I believe in the Indian story what hurts me is that I don't care who the sebi chief is man why are you undermining the Indian markets and why is the Indian opposition playing into these ends I think that is you know which is where one of my earliest comments even on Twitter was that I don't think there'll be a impact on the market per se or there's anything very damaging in the report but I always knew from the word go from the minute I saw that that this will be used and abused and milked politically you know dry the report you know and and also remember how they played this out Hindenburg as if you know there was a movie being released and then a blockbuster one you put out a trailer they said something big coming you don't do that if you're you are silently you want to make a money you want to make your money release your report and get on with it you've taken us what is the need for you to say you know there's something big coming and after all this the report comes out if I remember 945 10 pm or whatever 90 minutes from then 1130 or 12 midnight congress statement goes out and they are already read I just had to say that sebi chief has to go jpc has to be there and the whole thing was we need a jpc and that's what it is so whether there is credence truth you need a investigation doesn't matter the straight after the first thing that they started doing was that we will go after the government on this I think was I you know upset hurt yes but was I surprised no because I I knew that this is how this is what has been happening right some of these are used more by the politics and by the opposition here then what it deserves you actually made it more important you gave it more importance than it actually needed imagine if they had actually said that we believe in the market we believe in the investigation the sebi chief will come and give her answers we will wait until she gives her side of the story we will hear what the truth is and then we will come in no 1130 you said that this is what it is there's a jpc and she has to go because now I even saw statements we said that there's a link established there were all kinds of malicious wrong campaigns linking the sebi chief and adani about her daughter being married to his son etc when she doesn't even have a daughter now I personally want to spend some time actually making the case for I because I think it's very important now yeah people are talking about that 2018 February email to the manager of global dynamic opportunities where I think it was apparently she told that key shares should be I think to ask the fund manager to divest the shares after she has transferred them I mean what the continuation being made is she was still controlling them blah blah but the point is not that my point is that now I want to spend at least a few minutes talking about rbi and sebi as institutions what is the record are they independent is the indian stock market being regulated properly now from what I understand I'll give you an example like monica who's a dear friend who comes on the podcast regularly monica is part of many sebi committees also she she constantly goes there and monica was telling me how much if anything the indian regulator is over conservative when it comes to protection of indian indian market interest because one of the things in the last podcast monica had told me was that because nowadays tier two tier three city youngsters have started investing in stock markets they are so paranoid that these young kids might lose money is one of the reasons they had this capital gained tax nudge they're like in bachoko bachanaparayagi yeloko i was just a cricket my betting career was a stock market killer shiro jangi and they were really concerned so when I talk to indian serious you know experts like you monica and many others who actually meet these people who actually interact with these people I get the image that these people actually have a very paternalistic view of the indian population and the hindenburg guys are saying no rbi and sebi is out to devour you they are the worst thing uh on planet earth so i i absolutely agree with the statement that they are you know i want to record with this that i've dealt with multiple regulators but if i were to pick just two regulators who are top notch of all the ones that i've dealt with it's rbi and sebi now in terms of their conservative approach i'll just take three examples and it just drives the whole thing home and it has nothing to do with the government in power by the way you know what did what was the impact that india had on the 2008 subprime crisis we were almost unscatched there was some exposure that i see i see i had if i remember right i see i see a bank head on the subprime thing that we indirectly threw some branch outside whatever that's because the rbi was not permitting some of these instruments they were careful back then second again on crypto you know we've had all kinds of things about the rbi the rbi you know governor and i'm uh shaking under that has gone on record to say that we will not allow crypto because he very famously said in the tulip mini at least there was a tulip and here what is there underlying uh so you know they've just they have had a very strong position on crypto yes there were a lot of the new age crypto uh you know exchangers companies which made and made representation they said you know you should be permitting us then bank stopped giving uh bank accounts then rbi relaxed a bit and then they pulled it back again we had press writing all days that these people are shifting to the wire they're going to sing a poem we were losing crypto thing rbi i didn't budge they just didn't budge we did not have any thing on that now coming to sebi today you log into any of the broker accounts online the first warning and it's because of sebi it has to come and for everybody who ever trades whoever buys when they log in they'll see that 80 percent of the f1 players don't make money this is the thing this is the average loss these are disclosures that is made more like a shashi warning that you have on the cigarette pack they've done something like that now these are not regulators who are not caring for the people that who they are required to protect and which is where my initial reaction and that day the amount of tweet uh that i put out was you know i got called all kinds of names but i was not for a minute defending either adani or anything larger than the fact that you cannot be throwing mud at sebi so casually and that is where the problem this time is i think they've chosen the wrong regulator Hindenburg i think that's where the market reaction also played out because they also i think the market players do believe of course the sebi chief is not very famous amongst uh some of the people that she's gone after whether it is you know people who are influencing the markets the number of orders that we've seen on uh you know tv anchors taking positions before the show and things like that we've not seen some of these happen as often in the past uh so she has been somebody who's doing that job so again rbi sebi absolutely no doubt uh they are uh are top regulators is there a scope for improvement there's always a scope for increment in everything that we do but here i think it's just a incremental small thing there's nothing that we need to completely revamp rehash nothing of that sort for both of them in fact the irony is i remember the sebi chief only once in my life where she had made that statement on these fin fluencers and they had changed the rule and cracked a whip on these fin fluencers and i was like wow damn i and i remember that day i was like who's this person like she sounds like that typical indian anti urge of jobs it was quite quite a sight to see sebi crack down on these uh you know youtube uh fin fluencers who who were just uh and and just selling anything and saying anything and sebi basically said be careful what you're doing and we are watching you and if you cross the line which is why i keep trying to tell people sebi as an organization and rbi as an organization most people who are actually invested in the indian stock markets the only time they give rbi and sebi a gali is because they're like they're so conservative and riskovers that they are annoyingly riskover so why would they take a risk and that's the history of rbi and sebi they're the most riskovers organizations i've come across and also the kind of people they deal with the kind of issues they deal with i don't think they can either of them can be a soft touch regulator it won't work hmm yeah well now let me take a few questions before we wrap up now this is a legitimate question what's the harm of forming a jpc to shut out all the noise what's your view on that so i'll tell you what my worry of jpc is this will get even more politics i think what we need to do is actually view this the horse the politics minus the politics is there a need to investigate get more information like i said multiple times in the last one hour that we've saw 40 minutes that we've spoken that yes there is more facts that needs to come out there's more disclosure that has to happen but i think there's a way to do that i don't think jpc will achieve that i don't think uh you know discussing in the parliament will achieve that because this is just going to get political then what happens when the opposition makes it political is the government exists then you don't get anywhere because then it just becomes a face-off rather than that it it really needs to be a you know what now if can it be an investigation by sebi when she's there i think the the answer here is transparency and disclosure all that needs to be done is for them to come out to say that these are the transactions this is what it is one of the things that you know uh one of the channels or somewhere i was asked as to what can be done my personal view i think some of this we should get to a point where these can be put out on the website like you know judges are required to do the MPs are required to file along with their uh at free debits i think once you take public office uh you can disclose all your assets and transactions and conflicts so that people who see it can know what the truth is uh i think somewhere the answer lies there in my view and not in a jpc i i really personally i'm not in favor of agency yeah i agree with you uh okay somebody has made another comment saying that the cbi fbi director will not be the investigation officer of any case shouldn't the same be with sebi and any other regulator i mean having her sit on top of this just seems very silly and stupid so you know we need to look at uh the who's being investigated here in the first one it's Adani in the second shokas it's Hindenburg so she is it's after the last allegations of Hindenburg have come out that there are doubts on her she is not sitting in judgment of her role she is not investigating herself she's investigating Adani in one case and Hindenburg in the other and if there is no conflict then i see no reason why she shouldn't be doing both on the last bit is where whether there's a conflict or not some of facts need to come out to clearly establish this i think once that happens if she's not conflicted then why should she not be involved in the investigation yeah and listen if she held those shares and those companies before she joined sebi like what is the problem it goes back to the fundamental issue that you and i started with like if this this criteria is going to be set in an increasingly globalized world where uh let's say tomorrow we have a you know um in Indian origin boy or girl who drops their american citizenship or has an OCI for i'm just creating a hypothetical i'm not saying it will happen okay they come here and they join some important office as a lateral entry and then somebody finds out oh he was invested in the new york stock exchange in this company hey baba mother there has that person done something fundamentally wrong is what the investigation should show that's all i am saying and if that is the case then then fine then then punish them accordingly completely agree with you so somebody has said well if the rbi and sebi are paternalistic all the more reason why the the left will go after them because they hate the notion of the family you know so before we wrap up what do you think is the future in this entire thing how should india isolate this uh and and and and how do what do we conclude like is there any truth to this what is the truth to this how should india and indian markets now gauge themselves and because i i refuse to believe there is no geopolitics involved in this and there is no politics involved in this like Hindenburg can't come up with a 400 page report and congress can't come up with a tweet in two hours and we can't assume that oh everything is hunky dory like you how how did you read 400 pages i read four hours daily i can't finish yeah 200 pages in four hours how do the how did these people finish 400 pages what are they like ai bots or something so the point is my last question and then we'll and this this will be our closing pitch how do we raw wrap all of this up and how do we eventually know the truth about anything about the Hindenburg thing so i think uh you know we just need to wait for sebi to come out with it's uh the investigation uh conclusion report show cause notice whatever it is the latest statement that they have said 24 investigations 22 are complete one more is almost complete and the last one will also be complete soon uh no investigator is going to put out an interim report you're not going to go and educate or prepare the defense as to what they need to be doing so sebi is doing its job i think the first and foremost that i would do is wait for sebi to come out with its report on ada today the presumption is that they've already given a clinche to adani therefore they're compromised what if you actually get a report in the next one month which actually says yes there are issues there are non compliances and the sebi report actually nails adan will you still say that she was uh you know compromised and uh will not independent i think that's the first thing that we have to do wait till those reports come out could they have done it earlier yes you can always say why are they taking so long etc i have my own personal view on that because i don't think they would have wanted to do a shoddy job get that report thrown out at the courts because please remember that report and the findings that sebi will come out with will be under a lens and under the microscope and all possible ways to if it is going to be a negative report all possible ways to get it thrown out will be used therefore they would rather build a watertight case they're doing that work i think that's the first and foremost that we wait to see what actually comes out of the investigation second is really somewhere Hindenburg is not willing to respond to show cause notices etc i think they've been on their own trip and there are people even in India telling does Indian regulator actually have our jurisdiction to go after their main things like that therefore that's the second piece on the final one i think the way forward should be that there will be more answers more disclosure that will come out uh hopefully from the sebi and the sebi chief as to what the factual position on conflict independence etc i really i would personally wait to see what comes out we can't wait in eternity i think there are some petitions already before the supreme court i think sebi will now be forced to work with her faster and come out with its finding i would for one reserve what needs to be done what is the outcome until that do we need to do anything very differently to stop these kind of things i don't think so i think if we want to be with the big boys be in the market challenge these people you can't have a closed economy 2001 if i remember right one two six one two eight whatever short selling was banned in India you couldn't short sell so therefore one way to keep all these people out is to again close our markets you know take out all these kind of instruments etc i don't think we should be doing any of that these are part and parcel of really competing with the big ones uh swimming with the sharks you need to do some of these things uh we have to learn our way to uh you know get out of these situations learn to deal with it rather than become a closed economy a protectionist thing again more control more uh you know powers to the babu i don't think we should be going a few steps back on that fair enough Ajay thanks a lot for coming and uh you know educating me and everyone else because i think the fundamental point in all of this is that i think the the faith in the Indian markets and in the Indian regulators is far more important and i want to put this on record i will trust the RBI and SEBI as much as i dislike them over in Hindenburg i just want to put this on record i'm sorry Hindenburg i mean Hindenburg is as far as i'm concerned they are they are the worst form of creatures they are literally they have skin in the game they literally profit off of this shit so so to come off as oh we are so pure and pious you're not a not-for-profit company you're a short seller yourself you actually do this shit to make money so so so so Hindenburg take a hike uh whatever flaws the RBI and SEBI have and whatever flaws India as a country has we'll deal with that as Indians you keep your nose out of this entire episode and and if the SEBI chief has done something wrong let the Indian law take care of it Hindenburg is no one to interfere when they are a for-profit organization themselves Ajay thank you very much for coming brother thank you so much pleasure pleasure to be on this thank you so much for us yeah and i can't wait to troll you on on our CV row yeah we'll give you enough opportunities all right guys we'll close today's discussion here so Ajay's twitter or x handle is in the description of this podcast so whether you're listening to this on Spotify or you're watching this on in the video version on youtube facebook wherever go follow him on x as far as i'm concerned you know the charvock podcast is a member driven podcast so if you can do consider joining the membership program of the charvock podcast you can become a member on youtube and patreon both wherever you want to you can also send direct donations to kushalme right i cci through upi you can buy the charvock podcast merchandise on kushalmehara.com or on kadak merch if you can't do anything just if you're an audio listener leave a rating in your preferred audio platform or like the video subscribe to the charvock podcast youtube channel and leave a comment in the comment section i'll see you guys next time until then namaste take care bye bye you