$130 Million Fraud: Hindenburg's Report Accuses This Company Of 'Too Good To Be True' Schemes

While most know Hindenburg research for its reports that have previously rattled listed companies whose stocks end up bleeding once the short seller reports against it, its latest target is different.

Which Company Is Hindenburg¡¯s Latest Target?

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Also Read: Meet Nathan Anderson, The Man Behind Hindenburg Report

Double trouble has hit US-based venture capital firm Nanban Ventures, which is headed by its CEO Gopala Krishnan. Hindenburg Research has come out with a rattling report against the company, on the same day when the US market watchdog SEC (Securities and Exchange Commission) announced that it has obtained a temporary restraining order, asset freeze, and other emergency relief to halt an ongoing fraud targeting the Indian American community that has raised nearly $130 million since April 2021.

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Nanban Ventures¡ª With ¡°Friends¡± Like These¡­https://t.co/vZWOq5fWlj

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¡ª Hindenburg Research (@HindenburgRes) October 18, 2023

When Did Hindenburg Begin Research Against Nanban Ventures?

Hindenburg research began working on Nanban in February 2023 and went on to submit its findings to the SEC several months later. Hindenburg research has concluded that the Nanban group of companies was likely running an investment scheme, and shared our findings with the government. Click here to read the detailed report.

Who All Are Accused As In Nanban Ventures?

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Nanban Ventures LLC, its three founders Gopala Krishnan, Manivannan Shanmugam, and Sakthivel Palani Gounder, collectively known as the Founders, and three other entities that these Founders control are allegedly involved in committing the fraud, the SEC said in a press statement.

Unsealed in the US District Court for the Eastern District of Texas, the SEC complaint alleged that the defendants raised more than $89 million from more than 350 investors for investments in purported venture capital funds that the Founders managed through Nanban Ventures LLC. They also raised over $39 million from 10 investors which was later invested directly in the three other entities controlled by the Founders, as per PTI report.

The complaint added that the founders overstated the profitability of the investments and paid investors at least $17.8 million in fake profits which were actually Ponzi payments. The SEC alleged that the defendants misrepresented Krishnan's expertise and success using his eponymous 'GK Strategies' options trading method.

According to the SEC's complaint, Krishnan claimed in a YouTube video that he achieved returns of more than 100 percent, and Nanban Ventures claimed in the private placement memoranda of its venture capital funds that Krishnan would manage the funds to generate returns that would consistently overperform the S&P 500 Index". The complaint further alleged that the actual trading returns using GK Strategies were, with limited exceptions, lower than the returns of the S&P 500 index, lower than the percentage returns that Krishnan claimed in YouTube videos, and negative on numerous occasions, the SEC's media release said.

Also Read: Hindenburg Trolled For Failing To Detect SVB Crisis

What Were Hindenburg's Allegations Against Adani Group?

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Earlier this year, in January, Hindenburg research rattled the Gautam Adani-led Adani Group, which made the billionaire lose about half his wealth, and his companies¡¯ shares ended up losing crores of rupees in market value. Hindenburg research had accused the Adani Group of accounting frauds, stock manipulations, and money laundering. The Adani group has repeatedly denied all such claims. Click here to know more about it.

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