US-based short-seller Hindenburg Research, which accused Gautam Adani of pulling the largest con in corporate history, is getting trolled for missing the 'real scam' in California's Silicon Valley Bank (SVB).
SVB, which was a big lender for tech start-ups, was abruptly shut down last week by the state regulator - California Department of Financial Protection and Innovation or DFPI - after it disclosed it had suffered a loss of $1.8 billion from a $21 billion sale of its bond holdings.
The closure was swift as the regulator took the control of the lender within a day after it informed it had run out of money and was raising fresh capital. On Thursday, shares of the bank's parent SVB Financial had crashed by a whopping 60 per cent. The stock was down by another 60 per cent in premarket trading on Friday until being paused.
But what surprised many was the share sale by top executives of the bank, including CEO Gregory Becker, who sold $4.5 million worth of stocks before the collapse. Now, many suggest that the sale of shares by top executives just before the collapse may be a scam and that no agency could get the wind of it before it happened. Netizens are slamming the US-based Hindenburg, which published a voluminous report on Adani but failed to check what was happening in the banking system in its home country. "Hindenburg report missed to see books of "Silicon Valley Bank" (SVB) in very own country, but did hit Job on "Adani Business" in India," a Navy veteran wrote on Twitter. "It’s a clear case of conspiracy, who would have got benefited politically?"
Hindenburg's damaging report had caused massive erosion of the wealth of Gautam Adani and his investors. The stocks of Adani group firms had, at one point, crashed nearly 80 per cent, before making some recovery in the last few days following over Rs 15,000 crore capital infusion by an investment fund GQG.
Before publishing the report, Hindenburg had taken a short position in Adani group companies through US-traded bonds and non-Indian-traded derivative instruments.
Taking a dig at the short-seller, Saurav Gupta, another Twitter user, said he was waiting for Hindenburg to produce a report on Silicon Valley Bank "but they won't because they can't short it now".
Rishi Bagree, who describes himself as a tax-paying citizen, said from $700 to $40, Silicon Valley Bank was shut down by the US regulators after it lost 95 per cent of its market cap and went bankrupt. "A loss of $110 billion to the shareholders. Seems like Hindenburg completely missed this shorting opportunity," he said.
Genevieve Roch-Decter, CEO of Grit Capital, pointed out that Silicon Valley Bank CEO, CFO, and CMO sold over $4.4 million in stock over the last two weeks. "But they didn't know anything right?" she said, suggesting that the top executives were in the know of the financial health of the bank.
"This is the Western Banking system," Rohit, a user, replied to Roch-Decter's tweet. "Investor Bill Ackman, who attacked Adani Group over #Hindenburg report, now demands bailout from US govt for Silicon Valley Bank. Citibank India sold of its retail banking to Axis Bank and moved out." "Did any news agency speak about it? - why?" he asked.
America's billionaire investor Bill Ackman on Friday suggested that the US government should consider a "highly dilutive" bailout for SVB. He said the failure of SVB could destroy an important long-term driver of the economy as Venture Capital-backed companies rely on the bank for loans and holding their operating cash. "If private capital can’t provide a solution, a highly dilutive gov’t preferred bailout should be considered," he said.
However, Adani Group's Chief Financial Officer Jugeshinder Singh, who led the firefighting for the group after the critical report, took a jibe at Ackman and said: "Kid wants "mamma" to come help."
Ketan Gandhi, social media head of BJYM Vasai-Virar, also targeted Hindenburg and asked why it was silent on SVB. "Why are you so silent on the Silicon Valley Bank fraud issue," he asked. "Do you see the real issue in your own country USA? Or you are just paid to bark on #India and Indian businesses like #Adani." By the way, he said, Adani's solid comeback was bringing India again back on top.
Vishal Jain, the founder of a fund management company, said Adani was now paying back its debt at a record pace, stocks were stabilising, and would soon return to the pre-Hindenburg era. "Meanwhile, banks are failing in the USA."