It would have been hard to imagine a worst year than the last one for Andrew Left. First, the Citron Research founder lost a ton of money on GameStop shares. Being at the center of the meme-stock mania didn’t do wonders for his personal life, either. All of which forced him to reconsider the choices he’d made in life and to make a different one, abandoning the short-selling strategy by which he’d made his name and fortune. Then, he had to watch other short sellers make a mint on China Evergrande, whose insolvency he was among the first to spot—and for which he earned a five-year ban from trading in Hong Kong and with it the ability to profit on being right about Evergrande.
The U.S. Justice Department has seized hardware, trading records and private communications in an effort to prove a wide-ranging conspiracy among investors who bet against corporate shares, the people said. One tactic under investigation is “spoofing,” an illegal ploy that involves flooding the market with fake orders in an effort to push a stock price up or down, they said. Another is “scalping,” where activist short sellers cash out their positions without disclosing it.
Carson Block, the fiery short seller behind Muddy Waters, was served with a search warrant by an FBI agent in October, said people familiar with the matter, one of whom added that the warrant extended to Mr. Block’s phones. Federal agents took computers belonging to Andrew Left, another prominent short seller….
Not great. And speaking of those having a not great couple of years, the growing federal probe into whether banks got a bit fast-and-loose with information about upcoming block trades with hedge find clients now has a name.
Pawan Passi, who ran Morgan Stanley’s U.S. equity syndicate desk and led the firm’s communications with investors for equity transactions, is among individuals whose activities are facing scrutiny, the people said, asking not to be identified describing the confidential inquiry. Bloomberg reported in November that the company had put Passi on leave.
Anyway, back to kicking someone when they’re already down, the Securities and Exchange Commission has a few more uncomfortable questions to ask the already very heavily questioned cryptocurrency exchange Binance.
The two trading firms, Sigma Chain AG and Merit Peak Ltd., act as market makers that trade cryptocurrencies on the Binance.US exchange. One area of focus for regulators is how Binance.US disclosed to customers its links to the trading firms, the people say…. Corporate documents from 2019 tie Changpeng Zhao, Binance’s founder and chief executive officer, to the two trading firms, and former executives say that as of late last year Mr. Zhao controlled them both…. The former executives said Binance.US’s legal and compliance teams worried that they didn’t have a clear understanding of where the funds the two firms used to trade were coming from.
Anthony Scaramucci’s SkyBridge fund of funds fell 8.3 percent during January’s market turmoil and crypto pullback, according to letters sent to investors.
“We believe investors should approach 2022 with humility,” SkyBridge executives Scaramucci, Brett Messing, and Ray Nolte wrote in the firm’s year-end letter.
“Humility” is not usually a word associated with the Mooch. Nor, for that matters, does it describe Father Emmanuel Lemelson, God’s own hedge fund manager. Lemelson moonlights as an “unabashed” priest in his spare time, and it’s good that he’s got that hobby, because he may soon have a good deal more of it, on account of the lying.
A federal judge on Tuesday suggested an “unabashed” Green Orthodox priest and hedge fund manager may face a securities industry ban following a mixed verdict on fraud claims but pushed back on the U.S. Securities and Exchange Commission’s bid for a seven-figure financial penalty.
Justice Department Targets ‘Spoofing’ and ‘Scalping’ in Short Seller Investigation [WSJ]
Morgan Stanley’s Passi Faces U.S. Block-Trading Probe [Bloomberg]
SEC Probes Trading Affiliates of Crypto Giant Binance’s U.S. Arm [WSJ]
Defiant Priest May Face Ban After Verdict In SEC Fraud Case [Law360]
Scaramucci’s SkyBridge Gets Dinged by Bitcoin [II]
Bakkt, Once Wall Street’s Hot Crypto Play, Has Cooled [WSJ]
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