The Securities and Exchange Commission (SEC) has intensified its crackdown on shortsellers, leaving Nate Anderson-led Hindenburg Research potentially vulnerable to scrutiny. On Friday, the SEC announced enforcement action against Citron Capital and its founder Andrew Left for alleged illicit profits.
The SEC alleges that Citron and Left engaged in “bait-and-switch” tactics, advising followers to trade on their research reports while secretly reversing their positions to reap gains. This mirrors the allegations leveled by the Securities and Exchange Board of India (SEBI) against Hindenburg Research in the Adani Group shortselling case.
SEBI’s investigation, launched in 2021 following the GameStop trading turmoil, has been probing Hindenburg Research’s report on Adani Group, which triggered a significant market sell-off. Hindenburg Research has denied wrongdoing, claiming a modest $4.1 million revenue from the report.
As the SEC tightens its grip on shortsellers, Bloomberg News’ Bailey Lipschultz notes that other prominent names may face similar lawsuits. The SEC’s complaint against Citron Capital and Left charges them with violating anti-fraud provisions, seeking penalties and disgorgement of ill-gotten gains.
The regulatory spotlight on shortsellers is intensifying, and Hindenburg Research may face increased scrutiny in the wake of the SEC’s actions.
