Published , by Asif Khan
Published , by Asif Khan
It appears that the FBI and the Department of Justice are ramping up an investigation into multiple short selling firms, including Citron Research's Founder and Executive Editor Andrew Left. Left is famous for coming on CNBC and Bloomberg spouting off rhetoric about his favorite short positions. Two such short positions that Citron and Left completely whiffed on are Tesla and GameStop. It appears that the firm's short position in GME shares in January of 2021 are the focus of this DOJ probe which includes nearly 30 other investment and research entities.
Bloomberg is reporting that the FBI seized computers from Andrew Left's home in early 2021 and that the DOJ has ramped up subpoenas of multiple firms related to calendars, communications, and other records. This investigation encompasses almost 30 firms and 36 individuals. Many of the people being investigated have not been directly contacted by the government, leading to some confusion. “It’s very tough to defend yourself when you haven’t been accused of anything,” said Left.
Other hedge funds and firms that were short GameStop (GME) shares back in early 2021 are also being included in the DOJ requests. Melvin Capital Management, Sophos Capital Management, Orso Partners, Kerrisdale Capital Management, and even Hindenburg Research all appear to be under some form of investigation.
The DOJ probe is being lead by their fraud division, and it appears that no conclusions have been reached. This investigation occurs against the backdrop of an SEC that is looking to beef up transparency in hedge fund disclosures of margin and short sales. Some CEOs including Mark Cuban and Elon Musk have previously railed against the manipulative efforts of short sellers. In the last year, many GameStop investors and Reddit users have become fixated on leveling the playing field for retail investors in a battle against the shorts.
We will be keeping our eyes on this story, so be sure to keep it locked on Shacknews for all the stock market and GameStop news you can shake a stick at.
This article is only meant for educational purposes, and should not be taken as investment advice. Please consider your own investment time horizon, risk tolerance, and consult with a financial advisor before acting on this information.
Full Disclosure:
At the time of this article, Shacknews primary shareholder Asif A. Khan, his family members, or his company Virtue LLC had the following positions:
Long GameStop via GME shares
Long GameStop via GME call options
Long Tesla via TSLA shares