Skip to main content

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]

For more of the latest in litigation, regulation, deals and financial services trends, sign up for Finance Docket, a partnership between Breaking Media publications Above the Law and Dealbreaker.

Related

merrick garland

Ungrateful Justice Department Takes Aim At Vigilante Short Sellers

Merrick Garland’s go-getters go after their helpers.

fbi agents

If Your Ultimate Goal Is Not Going To Jail, Don’t Point A Gun At An F.B.I. Agent

An alleged Ponzi scheme you might be able to talk your way out of. That, not so much.

nikola truck

Nikola Statements That Short Seller Report Was Full Of Inaccuracies Appear Themselves To Be Full Of Inaccuracies

That whole bit about the “so-called ‘report’ replete with misleading information”? Yea, we might have spoken too soon about that.

Elon Musk Smoking

Dime Store Elon Musk Will Have To Do His Serial Innovating On Someone Else’s Turf

Nikola’s Trevor Milton isn’t successful enough to be able to make potentially untrue statements about his company on Twitter willy-nilly.

trump-citron

Citron Research Bought A Lemon

Andrew Left can’t say that Carson Block didn’t warn him.