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A year ago, it looked as though a group of degenerate Reddit shit-posters would hunt short sellers into extinction. But they evolved and survived, at least until now, as an army of prosecutors descends to kill off whichever of them are left.

The Department of Justice has sent subpoenas asking for information about a list of more than two dozen firms to a smaller group of market participants. Among other things, they are asking for calendar information and communications.

The list of names includes some of the best-known firms that publish negative research and funds that seek to profit when individual share prices fall. Among them are Muddy Waters, Melvin Capital, Hindenburg Research and Citron Research.

At issue is whether the work of such firms, however helpful, is a bit too coordinated to be, you know, legal. And they sure do seem to be worried, like dinosaurs looking up at a fiery red sky.

Participants fear authorities have targeted the entire sector. “Everyone has little titbits of things they’ve heard, or is scratching their heads about what on earth it is about,” said one market participant.

US investigates potential short selling abuses [FT]

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