Delhi court orders Google, Twitter to take down short seller’s Ebix report

NASDAQ-listed Indian e-commerce firm Ebix obtained an order on July 5 from the Tis Hazari court in Delhi to restrict certain tweets by Hindenburg Research, an investment advisory firm that holds a short position in the company. Ebix also managed to restrict Google search results pointing to the Ebix report.

Entrackr reviewed filings by Google and Twitter where the court order was disclosed.

Hindenburg published a report in June that made explosive assessments like the allegation that its “revenue is non-existent” and that they “see significant solvency risk over the next 12 months”. 

Hindenburg Research did not defend itself in court. Ebix said in a statement posted on its website that “while providing a detailed rebuttal with proof to the Court, the Company provided the Court with audit reports from India’s financial regulatory body and two independent auditors, for the last 3 years. The Court by its order dated July 5, 2022 restrained the Defendants from publishing the Hindenburg Report till the final disposal of the Suit.”

The short seller firm had cited frequent changes in the company’s auditors, non-existent business locations that it said appeared altered, and said that revenues to Ebix’s gift card business seemed suspicious.

When the report came out, Ebix stock crashed by 30%. Its share price currently stands at $23.96, well below its 2022 peak before Hindenburg’s report of over $30. 

An anonymous individual Twitter user who said they were invested in Ebix published a counter-report with some potential explanations for the discrepancies unearthed by Hindenburg. For instance, some clients of Ebix who Hindenburg said didn’t recall deals with the company may not have been able to make the connection because of earlier branding like itzCash used by the company, and because of lapsed deals.