TORONTO: Nate Anderson, the short-seller who has announced shutting down of research firm Hindenburg, is under cloud for alleged links with hedge funds in preparing reports targeting companies, a Canadian portal said citing documents filed before a court in Ontario.
In a cache of documents filed at the Ontario Superior Court of Justice in a complex defamation lawsuit, the head of Canada’s Anson hedge fund, Moez Kassam said his firm has shared research “with a wide variety of sources” including Hindenburg’s Anderson.
The Market Frauds portal said that court documents allegedly revealed that Hindenburg colluded with Anson while preparing a report. The preparation of bearish reports without disclosure of participation can be charged as securities fraud by the US SEC.
While short sellers borrow a security, sell it on the open market, and expect to repurchase it for less money after their damning report against the company brings stock down, involvement of hedge funds raises eyebrows as they could also place parallel bets, putting more downward pressure on stock prices.
While Anson and Kassam couldn’t be immediately reached, an email sent to Anderson remained unanswered.
