Nate Anderson, who recently announced the closure of his research firm Hindenburg, faces scrutiny over alleged connections with hedge funds in preparing company reports to target them, reports a Canadian portal citing documents submitted to an Ontario court.
Court filings at the Ontario Superior Court of Justice reveal that Moez Kassam, who heads Canada’s Anson hedge fund, accepted that his firm has shared research “with a wide variety of sources”, including Hindenburg’s Anderson.
According to Market Frauds portal, court documents suggest collaboration between Hindenburg and Anson during report preparation. Such bearish report preparation without proper disclosure of participation could potentially lead to securities fraud charges from the US Securities and Exchange Commission (SEC).
“We know for a fact, from the email conversations between Anderson and Anson Funds, that he was indeed working for Anson and published whatever they told him to, from the price target to what should and shouldn’t be in the report. He asked them multiple times if they needed ‘more’. From what we can see in the dozens of exchanges, at no time did he have editorial control. He was being told what to publish,” the website claimed.
Market Frauds presented alleged email exchange screenshots between Hindenburg and Anson, which it claims to have obtained from Ontario court documents, to substantiate its allegations.
“There are multiple counts of securities fraud for both Anson Funds and Nate Anderson, and we have only gone through 5 per cent of what’s in there as of the time of writing. From what we have read so far, it is almost a certainty that when the whole exchange between Hindenburg and Anson reaches the SEC, Nate Anderson will be charged with securities fraud in 2025,” it said.
Short sellers typically borrow securities, sell them in the open market, and aim to repurchase at lower prices following their negative reports. The involvement of hedge funds raises concerns as they might place concurrent bets, potentially increasing downward pressure on share prices.
Hindenburg Research issued a report in 2020 about Facedrive, a Canadian enterprise that became public via reverse merger, marketing itself as an environmentally conscious ride-sharing service. The report criticised its excessive valuation and generous payments to promoters. Court records indicate Anson communicated with Anderson regarding the report and knew its publication timeline.
These legal documents follow a distinct long-term investigation by the US Justice Department and the Securities and Exchange Commission. In June, Anson Funds Management and Anson Advisors Inc settled SEC allegations by paying USD 2.25 million, without accepting or denying wrongdoing, for failing to disclose payments to external publishers of negative research.
When established, Hindenburg announced receiving “hundreds of leads each year from diverse sources,” including sector specialists, informants and fellow investors. “We rigorously vet each lead and have always maintained full editorial independence over our work.”
Anderson announced the closure of Hindenburg Research last week. He gave no specific explanation for his decision but expressed wishes to dedicate more time to personal relationships.
“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 said in his closure announcement.