The Enforcement Directorate has shared stark details after a preliminary investigation into the Hindenburg Research report and submission to the SEBI (Securities and Exchange Board of India). As per the ED, there are 12 firms that significantly benefited after short-selling Adani shares. These companies, mainly belonging to the financial sector, were the top beneficiaries, ED reported. The ED shared this report with SEBI in July after it was asked to investigate the sudden market crash. Some of these short-selling companies allegedly took positions just a few days before the Hindenburg Research report was published on January 24. Others, according to ED, were allegedly taking short positions for the first time.SEBIs actionsTrading in derivatives is open to domestic investors as well as FPIs and FIIs registered with SEBI. These instruments let investors hedge market risks by taking short positions. SEBI permits controlled short selling because it thinks that prohibitions could impair accurate price discovery, provide price manipulators with unrestricted freedom, or even work against manipulators interests. According to them, no FIIs or FPIs have revealed their ownership structures to the tax authorities. One of the 12 “top beneficiaries” and the parent firm of a Cayman Islands FII pleaded guilty to insider trading and paid a US$1.8 billion punishment in the US. This FPI started a short position in the scripts of the Adani Group on January 20 and increased it on January 23. On January 10, another Mauritius-based fund initiated a short position.About EDs committeeThe ED had already provided the six-member Expert Committee, which the Supreme Court had established in March to investigate possible regulatory failures involving the Adani Group, with the intelligence and analysis it had obtained on potential insider trading. In fact, the Expert Committee stated in its final 173-page report that it had discovered that might lead to credible charges of concerted destabilisation of the Indian markets, and SEBI ought to be investigating such actions under securities laws. The report was submitted to the Supreme Court on May 6.A six-member Expert Committee, established by the Supreme Court in March to investigate regulatory failure in relation to the Adani Group, was previously presented with the intelligence and analysis the ED had obtained on alleged insider trading.The ED concluded that transactions and income tax information raise the possibility that FPIs and FIIs are not the end beneficiaries of the gains from short selling, but rather are acting as brokers for larger players based overseas. This conclusion was first shared with the Expert Committee and is now being shared with SEBI.