Skip to main content

If you are not Canadian, chances are you haven’t heard of Anson Funds. In short, like Canada itself, it’s basically a smaller, colder version of American hedge funds and short sellers like Muddy Waters and Citron Research, with whom it has been known to work from time to time. Like those better-known muckrakers, it likes to bet against companies it thinks sucks. Like its more prominent peers, it has thusly earned the ire of those companies and those companies’ Reddit-based fanboys. Like them, it has also moved away from short-selling in the wake of the meme stock frenzy a year ago. And, also like them, it’s gotten a rather unpleasant knock on the door.

Of dozens of firms that Bloomberg has identified as being mentioned in prosecutors’ sweeping requests for information and communications, Anson is among a smaller number that have been subpoenaed directly, according to people familiar with the matter. Exactly what’s prompting that level of attention isn’t clear.

Not clear, no, but there are certainly plenty of things that might be drawing said level of attention.

In the past four years, Anson Funds has more than tripled assets under management beyond $1.5 billion. In each of the past two years, it’s posted returns of around 45% -- lifting its average annual gain since inception to almost 16%.... While Anson pitches itself as a relatively conservative long-short company, some attribute its winning performance to aggressive investment strategies that have proved legally contentious. The firm has been sued or countersued at least five times over a variety of allegations it engaged in deception -- claims that Anson has vigorously denied. Plaintiffs include corporations that it’s bet against, a company shareholder and a short-selling researcher who went from collaborating with Anson to attacking it…. On some occasions, people with knowledge of its operations said, Anson engaged in a controversial practice of betting that shares of cannabis companies would fall, and later participating in their secondary stock offerings -- sales that often trigger price drops…. Anson has privately worked with several researchers whose communications have been sought by U.S. investigators, according to people with knowledge of the dealings. They include Citron’s Andrew Left and Spruce Point’s Ben Axler….

Hedge Fund With 45% Returns Drawn Into DOJ Probe of Short Sales [Bloomberg]

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.

merrick garland

Merrick Garland Ready To Finish Off Short Sellers

What r/wallstreetbets started, the Justice Department aims to finish.

trump-citron

Citron Research Bought A Lemon

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

closed

Layoffs Watch ’20: Hedge Fund WorldQuant Might Want To Change Its Name

It’s getting a good deal less global at the quant shop.

gamestop

It’s Technical

GameStop’s gravity-defying rise, that is.

gamestop 2

Andrew Left Embraces His Inner Millennial

Short selling is out. Helping Redditors ride rocket stonks to the moon is in.