US DoJ Launches Expanded Poll on Short Selling – Bloomberg News

FILE PHOTO: Image of the United States Department of Justice Building
FILE PHOTO: A woman walks past the U.S. Department of Justice Building, in Washington, U.S., December 15, 2020. REUTERS / Al Drago / File Photo

December 10, 2021

(Reuters) – The U.S. Department of Justice (DoJ) has opened an extensive criminal investigation into the short selling of hedge funds and research firms, Bloomberg News reported on Friday, citing people familiar with the matter.

The investigation, conducted by the DoJ’s fraud division with federal prosecutors in Los Angeles, is probing how hedge funds mined and set up their bets, the report said. indications that they improperly coordinated the transaction or violated other laws for personal gain, the report said.

The report adds that authorities are scrutinizing the financial relationships between hedge funds and researchers, and examining whether the funds engage in insider trading or fraud. other abusive behavior or not.

Anson Funds and Marcus Aurelius Value are among more than a dozen companies targeted by investigators, according to the report.

The department is also examining the trading of dozens of stocks such as Luckin Coffee Inc and GSX Techedu Inc, of which Carson Block’s Muddy Waters Capital and Andrew Left’s Citron Research also circulated research, the report said.

According to the report, trading at short-term targets such as Santa Ana, California Inc’s Banc and California-based Mallinckrodt Plc is also being examined.

The DoJ’s move comes after the US securities regulator said earlier this year it was considering measures to require large investors to disclose more about short positions, or bet that stocks stocks will fall and the use of derivatives to bet on other stock moves.

The regulator has also moved to protect retail investors from trading apps that use features common to video games to promote risky trading.

The Securities and Exchange Commission’s review of the rules was prompted by the GameStop story in January and the collapse of Archegos Capital.

Citron, one of the world’s most famous short sellers, in January said it would stop publicly detailing the companies’ shortcomings following a backlash against it, and others said its shares Video retailer GameStop is not worth the price.

The DoJ did not immediately respond to Reuters’ request for comment.

(Reporting by Niket Nishant and Noor Zainab Hussain in Bengaluru and Chris Prentice in Washington; Editing by Shailesh Kuber) US DoJ Launches Expanded Poll on Short Selling – Bloomberg News

Bobby Allyn

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