FBI raided short sellers offices
FBI agents raided GameStop and AMC short-sellers
As part of an investigation into alleged wrongdoing by short-sellers, federal agents have reportedly raided the residence of Citron Research founder Andrew Left, he is a well-known short-seller for GameStop Corporation.
According to Bloomberg, the FBI seized computers from Left's home in early 2021.
The probe has already caught the attention of several prominent short-sellers, including Muddy Waters' Carson Block, who reportedly had his phone seized by an FBI search warrant in October.
Meanwhile, Bloomberg reports that the Department of Justice has subpoenaed records of nearly 30 investment firms that are linked to three dozen prominent short-sellers.
Founder of Melvin capital management hedge fund Gabe Plotkin another short seller of GameStop and AMC Entertainment Holdings Inc, Nate Koppikar from Orso Partners, Jim Carruthers from Sophos Capital Management, Nate Anderson of Hindenburg Research, and Fraser Perring from Viceroy Research comprise the list.
It is being investigated by the Department of Justice whether hedge funds and research firms have colluded. These hedge funds often write research reports, which are then published as their own by the research firms.
By hiding its involvement, the hedge fund makes money when the report is published and the stock drops.
The DOJ is also looking into other illegal activities such as ‘’Spoofing’’, the act of spoofing involves flooding the market with fake orders to move the price of a stock.
The DOJ has not yet charged anyone or alleged any wrongdoing and launching an investigation does not mean anyone will face charges.
“It’s very tough to defend yourself when you haven’t been accused of anything,” Andrew Left told Bloomberg.
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