Moez Kassam, head of Anson Funds, according to documents filed before the Ontario Superior Court of Justice, admitted that his firm had shared research with “a wide variety of sources,” including Hindenburg Research.
Nate Anderson, the infamous short-seller and owner of Hindenburg Research, announced that he has shut down his nearly eight-year-old research firm last week.
The move comes amid allegations of a conspiracy involving Canadian hedge fund Anson Funds while publishing damning reports on publicly traded companies, as reported by PTI.
Moez Kassam, head of Anson Funds, according to documents filed before the Ontario Superior Court of Justice, admitted that his firm had shared research with “a wide variety of sources,” including Hindenburg Research.
The documents, part of a complex defamation lawsuit, allegedly reveal that Anderson collaborated with Anson in preparing bearish reports targeting specific companies.
Market Frauds, a website based in Canada, reported that Anderson had no editorial independence but published reports on Anson’s demand, which may contravene securities regulations.
Market Frauds’ court documents and email exchanges indicate that Anderson collaborated closely with Anson Funds in creating reports, creating potential undisclosed conflicts of interest. Short sellers make money by borrowing and selling securities and betting that the value of their security will go down after the release of a critical report.
However, hedge funds such as Anson taking parallel bets alongside such reports increase the downward pressure on stock prices, which could cause securities fraud.
Screenshots of purported email exchanges shared on Market Frauds show that Anderson had asked Anson Funds for guidance over content, pricing targets, and the timing of the reports. The website claimed that Anderson showed them in various instances that he sent multiple queries asking them if they needed “more” and seemed to heed all instructions provided without question. “At no point did Anderson exercise editorial control over his reports,” the portal alleged.
The SEC has been stern on non-disclosure of such collaborations in the past and may even file fraud charges. In June, Anson Funds reached a settlement involving a separate SEC investigation when it agreed to pay $2.25 million over allegations that it failed to disclose payments made to publishers of bearish research.
Hindenburg’s Controversial Legacy
Hindenburg Research made headlines worldwide with its 2023 report on the Adani Group, which claimed financial impropriety and created a political storm in India. The report resulted in massive losses for the conglomerate and further damaged its global reputation. In the past, Hindenburg has targeted many companies, such as the Canadian ride-sharing service Facedrive in 2020. Court filings claim that Anson Funds had advance knowledge of the FaceDrive report and its date of publication, further questioning Hindenburg’s independence.
In its defense of its practices, Hindenburg reported that it was receiving “hundreds of leads each year” from whistleblowers, industry experts and investors, but thoroughly vets any lead. All this is overshadowed by these claims of an immediate coordination between Anson and Hindenburg’s accusations.
Nate Anderson’s Reaction and Hindenburg’s Shutters
Though he did not directly respond to the charges, Anderson last week announced he was closing Hindenburg Research, saying he needed time to be with family and friends. “Nearly 100 individuals have been charged civilly or criminally by regulators, at least in part through our work, including billionaires and oligarchs. We shook some empires that we felt needed shaking,” he wrote in his farewell note.
However, the timing of the announcement made by Anderson has sparked controversy since it is most likely to attract attention from the US Securities and Exchange Commission (SEC) on allegations of collusion with Anson Funds. Market Frauds says that the Ontario court documents could see Anderson charged with securities fraud in 2025.
Impact on the Short-Selling Industry
The allegations against Hindenburg and Anson Funds have reignited debates over the ethics of short selling and the role of hedge funds in manipulating markets.
Critics argue that coordinated efforts to publish negative reports can destabilize markets and destroy shareholder value, often targeting smaller companies unable to withstand such pressure.
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