(Bloomberg) -- It was one of the most impactful short-seller reports ever: Hindenburg Research’s 2023 broadside against the Adani Group erased as much as $153 billion of market value.

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But it turns out the US short-seller’s gains from the saga were tiny by comparison — just over $4 million.

That figure, which hasn’t been independently confirmed by Bloomberg News, was disclosed by Hindenburg in a statement on its website Monday. It’s the first time the New York-based firm, founded by Nathan Anderson, has provided a tally of its winnings from last year’s bombshell report alleging fraud and market manipulation at the Indian business empire of Gautam Adani — one of Asia’s richest tycoons.

The contrast between Hindenburg’s gains and the wider impact underscores how opportune research can have far-reaching effects, even if it’s not always easy to profit from the fallout. Shares and bonds of Adani Group companies swung wildly in the immediate aftermath of Hindenburg’s report but have since recovered ground. As of Monday, the group market value was $205 billion — about $30 billion short of its pre-Hindenburg level.

The scathing report earned a gross revenue of about $4.1 million through gains related to Adani shorts from “one investor relationship” — Hindenburg didn’t name who — and about “$31,000 through our own short of Adani U.S. bonds,” according to the short seller’s July 1 statement.

The firm also posted on its website the full “show cause” notice it said it received from the Securities and Exchange Board of India, or Sebi, in June, which states that Hindenburg’s report on the Adani Group had certain misrepresentations and inaccurate statements that were meant to mislead readers.

In the 46-page document, Sebi said Hindenburg “has resorted to extrapolation and conjecture to emphasize some facts and understate others in favor of negative inference against Adani Group Companies.” It also said the short seller cited a broker banned from the securities market, shaking investors’ trust in the regulatory framework.

Hindenburg in turn said India’s markets regulator failed to address the fraud allegations in its report last year.

Sebi “seems more interested in pursuing those who expose such practices” while its investigation into billionaire Adani’s empire has hit a wall, Hindenburg said.

Its latest broadside comes at a time when India’s newly energized opposition parties have been criticizing Prime Minister Narendra Modi for crony capitalism, after the leader was returned to power with a smaller mandate than expected last month.

Adani Group stocks shrugged off the latest missive from Hindenburg. Shares of all 10 Adani-linked firms traded higher on Tuesday, led by the energy and gas units that rallied more than 4% each.

‘Masking Kotak’

Hindenburg said that Sebi’s notice “conspicuously” failed to mention Kotak Mahindra Bank Ltd., which it said created and oversaw the offshore fund structure used by Hindenburg’s investor partner to bet against Adani. The regulator “masked the ‘Kotak’ name with the acronym “KMIL”,” it added, though Kotak is the body with ties to India.

KMIL refers to Kotak Mahindra Investments Ltd., the asset management company. Kotak Mahindra Bank’s shares slipped as much as 3% on Tuesday after Hindenburg’s disclosures.

Kotak said in a statement on Tuesday that Hindenburg has never been a client of Kotak Mahindra International Ltd.

Sebi’s notice also named US hedge fund Kingdon Capital Management as an involved party, stating that Kingdon knew about Hindenburg’s research on the Adani Group before it was published and had a profit-sharing pact with the short-seller on its trades.

Hindenburg shared a draft of the Adani report with Kingdon in November 2022, nearly two months before it published the report, according to the Sebi show cause notice. In return Kingdon agreed to share 30% of its net profits from trading securities related to Adani with Hindenburg. That profit-sharing then got reduced to 25%, due to the cost of setting up these trades.

In January the following year, a fund controlled by Mark Kingdon transferred $43 million to the K India Opportunities Fund, which started building short positions via futures for Adani Enterprises Ltd, the conglomerate’s flagship listed entity, the cause notice said. These short positions were later squared off by Feb. 22 and reaped $22 million.

As of June 1, the Kingdon fund returned $4.1 million of the gains from the Adani short sale to Hindenburg while another $1.4 million has yet to be shared, according to Sebi. In Tuesday’s statement, Kotak said Hindenburg has never been an investor in the K India Opportunities Fund.

The Indian markets regulator didn’t immediately respond to Bloomberg’s request for comment. Nor did the Adani Group. Kingdon Capital Management was not immediately reachable outside of US business hours.

--With assistance from Ashutosh Joshi and Preeti Singh.

(Updates with details throughout.)

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