The logo of Adani is seen in Mumbai
The logo of Adani is seen in Mumbai AFP

Nathan Anderson sees himself as a scourge of corporate manipulation, but some investors and business leaders see short-sellers like him as engaging in tactics more akin to Wall Street gunslinging for profit.

Anderson heads the New York-based short-seller Hindenburg Research, which profits as its attacks on Indian business tycoon Gautam Adani gain steam.

A week ago, Hindenburg released a 106-page report on the Adani Group, calling it "The Largest Con in Corporate History." Since then, Adani's seven listed companies have shed more than $60 billion in the stock market.

Hindenburg's report did not attack Adani's business activities so much as accuse the conglomerate's managers of stock price manipulation, accounting fraud, tax evasion and money laundering.

As a short seller, Hindenburg is betting on -- and profiting from -- the fall of Adani's share price. The strategy entails borrowing shares, selling them on the open market, then buying them back when the price falls before transferring them back to the lender and pocketing the difference.

"Hindenburg is a reputable short-seller. It is legal short-selling while issuing accusatory claims on a company," Wuyang Zhao, of the University of Texas's McCombs School of Business, told AFP.

"The statements that you make about a company can be positive and they can be negative. The goal is simply that they are true," added Jill Fisch of the University of Pennsylvania Law School.

"If (the published claims) are false, you can be challenged" by regulators or the company in question, said Usha Rodrigues, a securities law expert at the University of Georgia.

Hindenburg, which takes its name from the German airship that crashed in New Jersey in 1937, is not new to puncturing corporate misstatement.

Founded in 2017 by Anderson, the firm of fewer than 10 employees has already pushed several companies to admit accounting errors or misrepresentations.

Its biggest success has been against electric truck maker Nikola, which was accused in June 2020 of lying about the status of its technology.

The company agreed to pay $125 million to the US Securities and Exchange Commission, and last October its founder, Trevor Milton, was found criminally guilty of misleading his company's shareholders.

In a rare interview with the New York Times, Anderson, who did not respond to requests from AFP, said that revealing corporate misinformation could "make a real-world dent" beyond finance.

"If the only impact was stock prices moving around, the work would be far less satisfying."

Anderson has followed a winding career path. A graduate of the University of Connecticut, he was once an ambulance driver in Israel and had several finance jobs before discovering his passion to "find scams."

His role models include Harry Markopolos, a forensic accountant who warned about fraudster Bernard Madoff as early as 2000, eight years before Madoff's fall as mastermind of the largest Ponzi scheme in history.

Among the most famous short-seller activists is also Jim Chanos, who helped expose the Enron scandal and push the Houston-based energy broker to bankruptcy in 2001.

In spite of these examples, short sellers are often demonized, partly because by undercutting a company they can harm shareholders, in particular individual shareholders.

According to media reports, the US Justice Department in early 2022 launched a vast investigation into several short-selling firms, including the Muddy Waters research firm, suspected of having used illegal methods to bring down the price of shares in several corporations.

Since the publication of the Adani study, posts have stacked up on social media accusing Hindenburg of lies, opportunism or fraud.

"I know the short-sellers often get a bad rap," said James Angel, a professor of finance at Georgetown University. "But anything that's overpriced is nobody's friend.

"Periodically, there are attempts to ban short-selling. And they're always undone very quickly, because they realize the bans do more harm... than good," Angel added.