Authorities in the US are looking into what representations Gautam Adani-led Adani Group made to its American investors following a scathing short seller’s report that accused the firm of using offshore companies to secretly manipulate its share prices, Bloomberg reported. The interest from US authorities adds to the intense scrutiny of Adani Group, one of India’s biggest conglomerates, following short seller Hindenburg Research’s report accusing it of long-running stock manipulation and accounting fraud. Adani Group is already facing regulatory investigations in India.


Citing a source privy to the development the news agency said the US Attorney’s Office in Brooklyn has sent inquiries in recent months to institutional investors with large holdings in Adani Group. The requests for information were focused on what Adani Group told those investors, said the person, who asked not to be identified because the probe isn’t public. The Securities and Exchange Commission (SEC) also has a similar probe underway, two other sources told Bloomberg.


Requests for information from US prosecutors don’t necessarily mean that criminal or civil proceedings will be filed as law enforcement agencies often open inquiries that don’t lead to action.


News of the inquiries emerged as President Joe Biden rolled out the red carpet for Prime Minister Narendra Modi at the White House. A spokesperson for Adani Group said it was not aware of any subpoenas to investors. “Our various issuers groups remain confident that the disclosures are full and complete as disclosed in the relevant issuer offering circulars,” the spokesperson said. The group has denied the short seller’s accusations.


Spokespeople for the Eastern District of New York US Attorney’s Office and SEC declined to Bloomberg’s request for comment.


Adani Group’s troubles began when Hindenburg on January 24 released a report accusing the conglomerate of using a network of offshore companies in tax havens to embellish share prices and financial results. The report also alleged that the group had flouted disclosure and shareholding laws.


Adani Group rejected the accusations and said in a lengthy rebuttal that Hindenburg’s report was “nothing short of a calculated securities fraud.” Still, a steep share price decline followed that at one point wiped as much as $153 billion off the combined market value of Adani Group’s 10 publicly traded businesses.


Some investors divested quickly. JPMorgan Chase & Co. cut Adani Group stocks from its ESG funds in the weeks following the report. Other institutional money managers, like BlackRock Inc. and and the fund management unit of Deutsche Bank AG, stayed put. In the months following the report, GQG Partners LLC had spent about $2.5 billion in five Adani Group stocks.


In a bid to reassure investors, Adani Group in March met with Pacific Investment Management Company, BlackRock and Blackstone Inc. as part of a plan to market privately placed bonds for some of its companies, Bloomberg previously reported.