Dozens of short-sellers have reportedly been caught up in a sweeping DOJ probe into potential abuses
- The Justice Department is collecting information on dozens of investment firms and researchers involved in short selling, Bloomberg reported Friday.
- The Securities and Exchange Commission also has sent some information requests. No one has been accused of wrongdoing, the news outlet said.
The Justice Department is collecting information on dozens of investment firms and researchers involved in short-selling as part of a wider US search for potential trading abuses, according to a Bloomberg report Friday.
The DOJ in recent months has subpoenaed certain market participants, seeking communications and other records relating to nearly 30 investment and research firms, as well as three dozen individuals associated with them, the report said, citing unnamed sources familiar with the matter.
The Securities and Exchange Commission also has sent some information requests. Spokespeople for the DOJ and the SEC declined to comment, Bloomberg reported. No one has been accused of wrongdoing, and in many cases, the start of a probe doesn't lead to charges against anyone, it added.
Bloomberg in December reported on the Justice Department's investigation, with authorities trying, among other things, to figure out alliances and understand how short-sellers handle research and arrange bets that stocks will fall.
Friday's report said the Federal Bureau of Investigation in early 2021 seized computers from the home of Andrew Left, the founder of Citron Research and a prominent short-seller. He told Bloomberg he's frustrated by the probe.
"It's very tough to defend yourself when you haven't been accused of anything," Left was quoted as saying. "I'm cooperating and I have full faith in the system and the First Amendment," he said, referencing US constitutional protections on free speech.
Bloomberg reported that firms and their leaders mentioned in the Justice Department's information requests include Melvin Capital Management and founder Gabe Plotkin, Orso Partners and Nate Koppikar, Sophos Capital Management and Jim Carruthers, and Kerrisdale Capital Management. The list also included researchers such as Nate Anderson and his Hindenburg Research firm as well as Fraser Perring and his Viceroy Research.
The report said representatives for most of those firms — Melvin, Orso, Sophos and Hindenburg — declined to comment or didn't respond to messages seeking comment.
"We haven't been contacted by DOJ, SEC or any governmental authorities about any investigations," Sahm Adrangi, Kerrisdale's chief investment officer, wrote in an email to Bloomberg. "We literally haven't spoken to anyone at the government in many years."
Viceroy's Perring told Bloomberg his firm hasn't received information requests.
"We will always cooperate with any such investigations and are happy to assist regulators in carrying out their duties," Perring was quoted as saying. "All our reports are based on information that is publicly available, sourced from records that anyone at any given time could research or find. Our most recent contact with the DOJ was in assisting an investigation into the fraud at a company that we had researched."
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