How is Adani-Hindenburg kerfuffle related to Madoff- the monster of Wall Street? | Mint
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Business News/ News / How is Adani-Hindenburg kerfuffle related to Madoff- the monster of Wall Street?
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How is Adani-Hindenburg kerfuffle related to Madoff- the monster of Wall Street?

Do you know, there was a man named Bernie Madoff aka 'The monster of Wall Street' responsible for largest ponzi scheme ever and he also has connection with Adani-Hindenburg face-off. Read this to know how the two are related

Gautam Adani (Left), Nathan Anderson (Centre), Bernie Madoff (Right)Premium
Gautam Adani (Left), Nathan Anderson (Centre), Bernie Madoff (Right)

Since the release of the Hindenburg Research Report on 24 January, the past couple of weeks have been tempestuous for the Adani Group. The fallout from the report pushed the 2nd richest man in the world down to a struggle to remain in the top 20. Anyway, Adani's story has more to it than just the market context such as FPO (Follow-on public offering) call-off, short selling, exposure, downside, and there is yet another interesting fact lurking beneath the Adani- Hindenburg kerfuffle. A fact that will lead us to the largest Ponzi schemes ever and the man behind it- also called the ‘Monster of Wall Street’.

Monster of Wall Street; Bernard ‘Bernie’ Madoff earned this name when it was revealed that he was behind the world’s largest Ponzi scheme amounting to around $65 billion. But what does Madoff, an American financier, have to do with Adani and Hindenburg? The answer to this question lies behind the man who established the Hindenburg Research.

Nathan Anderson, a graduate from the University of Connecticut with a degree in international business established the Hindenburg Research in 2017 as a forensic financial research firm that examines derivatives, credit, and equities. The interesting thing to note here is that Hindenburg not only exposes corporate frauds in companies but also places short bets in favour of a fall in the stock price of such companies and derives huge profits.

Some say , the Hindenburg Research accused the Adani group with "brazen" market manipulation and frau, which led to a large stock selloff, for similar gains.

So, where does Madoff come into this picture? Be patient, you will know soon.

Harry Markopolos, a securities industry executive and a forensic accounting and financial fraud investigator, tried to warn the American authorities about Madoff’s Ponzi scheme much before it magnified to the size worth $65 billion and finally bursted in 2008. Markopolos, a person who understood the underlying math of the markets, flagged multiple questions against Madoff’s fraudulent returns.

Coming back to Hindenburg, its founder Anderson considers Harry Markopolos his role model and a mentor. Financial Times reported that Markopolos and Anderson have worked together during Anderson’s initial cases. One of the cases where the two worked together was against a hedge fund, Platinum Partners. They charged the Platinum Partners of a $1-billion scam.

Markopolos identifies Anderson as a ‘world-class digger’. “If there are facts he will find them and all too often he’ll discover that there are skeletons in the closet," reported FT quoting Markopolos on Anderson.

The Adani-Madoff connection
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The Adani-Madoff connection

So, now here we put together the whole story - Adani group was attacked by a report released by Hindenburg Research: Hindenburg Research was established by Nathan Anderson: Nathan Anderson considers Harry Markopolos his mentor and role model: and back in the day, Markopolos had exposed Bernie Madoff's Ponzi scheme.

Another interesting incident in this story came up when Adani retaliated to the allegations made by Anderson’s research firm with a 437 page reply which in a dramatic way called the New York-based research outfit the “Madoffs of Manhattan." Somehow they did not realise that Anderson had worked with Harry Markopolos, thus putting him naturally in an anti-Madoff camp.

The supporters of the Butterfly Effect might say that what Adani is facing today might have been triggered by a piece of paper Harry Markopolos held while figuring out that there is something wrong with Madoff’s hedge fund.

Madoff: The Monster of Wall Street, a docu-drama on Netflix, shows how Harry Markopolos unearthed the $65-billion ponzi scheme, which was run by Bernie Madoff by putting together the pieces of paper (Madoff’s receipts) showing tampered returns to his investors..

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Published: 09 Feb 2023, 11:37 PM IST
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