According to news agency PTI, Hindenburg Research founder Nate Anderson, who announced last week the closure of the short-selling firm, may face charges of securities fraud.
Anderson faces investigation for allegedly collaborating with hedge funds to create reports aimed at different companies, according to the report from a Canadian portal that referenced documents submitted to a court in Ontario.
The portal reported that filings in a defamation lawsuit at the Ontario Superior Court disclosed that Moez Kassam, leader of Canada’s Anson hedge fund, acknowledged sharing research with multiple parties, including Hindenburg’s Nate Anderson.
The Market Frauds portal referenced in the PTI report indicated that court documents “reportedly uncovered” that Hindenburg Research “collaborated with Anson” during the preparation of a report.
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It also emphasized that creating a bearish report without revealing involvement could be considered securities fraud by the US Securities and Exchange Commission (SEC).
While it is typical for short-sellers to borrow a security, sell it on the market, and subsequently buy it back at a reduced price after unfavorable reports on companies, the participation of hedge funds creates worries.
This is due to the fact that these funds can make simultaneous investments that increase the downward force on stock prices.
Anderson, Anson, and Kassam have not released any statement regarding the issue.
The portal, cited by PTI, stated, “We are certain, based on the email exchanges between Anderson and Anson Funds, that he actually worked for Anson and released whatever they instructed him to, ranging from the price target to what ought to be included or excluded in the report.”
“He inquired several times whether they required ‘more’.” Based on the numerous exchanges we’ve observed, he never had editorial control at any point. “The portal asserted that he was instructed on what to publish.”
