Team Blitz India
NEW DELHI: US-based Hindenburg Research, which was slapped with a show-notice by the Securities and Exchange Board of India (Sebi) over its “unfair trade practices”, has had a chequered history, facing legal challenges in several countries.
In the US, it published a report in February 2021, alleging that a company, called Clover Health, had not disclosed an active investigation into its business model by the Department of Justice. Clover denied the allegations, leading to heightened scrutiny and legal challenges from investors.
Earlier, in December 2018, along with another short-seller, Hindenburg published a report alleging that Canadian cannabis company Aphria had overpaid for foreign assets that were largely worthless. The report caused Aphria’s stock to tumble, prompting investigations and investor lawsuits. In September 2020 Hindenburg published a report on commercial EV manufacturer Nikola Corporation, which led to investigations by the US Securities and Exchange Commission and the Department of Justice. Nikola founder Trevor Milton faced charges, and the company agreed to a $125-million settlement with the SEC. The same year, Hindenburg accused GSX Techedu, a Chinese online education company, of fabricating its financial and operating data. This resulted in multiple lawsuits.
Again, in August 2019, Hindenburg released a report alleging that RFF, an Australian real estate investment trust, was involved in fraud. RFF denied the allegations and took legal action against Hindenburg.
