Hindenburg's Nate Anderson under scrutiny for sharing report with hedge fund: Report

Nate Anderson, the 'activist' short-seller behind Hindenburg Research, which is set to close after nearly eight years of operation, is facing scrutiny over alleged connections with hedge funds in preparing reports targeting companies, according to a Canadian news outlet citing documents filed in an Ontario court.

In a set of documents submitted to the Ontario Superior Court of Justice as part of a complex defamation lawsuit, Moez Kassam, head of Canada’s Anson hedge fund, stated that his firm had shared research "with a wide variety of sources," including Anderson’s Hindenburg.

The Market Frauds website reported that these court filings suggested Hindenburg collaborated with Anson on a report, raising concerns about potential securities fraud. If short-sellers and hedge funds coordinate on reports without disclosing their collaboration, it could lead to charges by the U.S. Securities and Exchange Commission (SEC).

Short-selling typically involves borrowing a security, selling it, and hoping to repurchase it at a lower price after the stock drops, potentially triggered by negative reports about the company. The involvement of hedge funds raises alarms because they could place parallel bets, amplifying downward pressure on stock prices.

While attempts to reach Anson and Kassam for comment were unsuccessful, Anderson did not respond to an email inquiry.

"We know, based on email exchanges between Anderson and Anson Funds, that he was essentially working for Anson and publishing whatever they instructed, from the price targets to the content of the report," the website claimed. "He repeatedly asked if they needed 'more' information. From what we’ve seen in the numerous email exchanges, Anderson had no editorial control and was being directed on what to publish."

Market Frauds also shared screenshots of alleged email interactions between Hindenburg and Anson to support their allegations.

"There are multiple counts of securities fraud for both Anson Funds and Nate Anderson, and we’ve only reviewed 5% of the available documents," the website said. "Based on what we’ve seen so far, it seems almost certain that Anderson will face securities fraud charges in 2025 when the SEC investigates further."

Initially, Hindenburg had defended its independence, stating that it receives numerous leads each year from various sources like industry experts, whistleblowers, and investors. The firm claimed to rigorously vet each lead and maintain editorial independence.

In 2020, Hindenburg Research published a report on Facedrive, a Canadian eco-friendly ride-sharing company that went public via a reverse merger, alleging it was overvalued and lavishly compensating promoters. Court documents suggest that Anson exchanged emails with Anderson regarding the report and had prior knowledge of its release.

These filings come amid a separate investigation by the U.S. Justice Department and the SEC. In June, Anson Funds Management and Anson Advisors Inc. agreed to settle SEC claims, without admitting wrongdoing, by paying $2.25 million for failing to disclose payments to external publishers of negative research.

Last week, Anderson announced the closure of Hindenburg Research, which gained global attention in 2023 for its explosive reports on billionaire Gautam Adani’s conglomerate, leading to political controversies and significant financial losses. Anderson did not provide a specific reason for the closure but expressed his desire to spend more time with family and friends in the future.

"Nearly 100 individuals have faced civil or criminal charges, in part due to our work, including billionaires and oligarchs," Anderson wrote in his announcement. "We’ve shaken some empires that we believed needed shaking."

(With inputs from PTI)