(Reuters) – The U.S. Department of Justice (DoJ) has launched an expansive criminal investigation into short selling by hedge funds and research firms, Bloomberg News reported on Friday, citing people familiar with the matter.
The investigation, run by the DoJ’s fraud section, is probing how hedge funds tap into research and set up their bets, looking for signs that they improperly coordinated trades, the report said.
Authorities are scrutinizing the financial relationships between hedge funds and researchers, the report added, and examining if those funds engaged in insider trading or other abuses.
Anson Funds and Marcus Aurelius Value are among the more than a dozen firms under the scanner of the investigators, according to the report. The department is also examining trading in dozens of stocks like Luckin Coffee Inc and GSX Techedu Inc, on which Carson Block’s Muddy Waters Capital and Andrew Left’s Citron Research also circulated research, the report said.
The DoJ did not immediately respond to Reuters request for comment.
(Reporting by Niket Nishant in Bengaluru and Chris Prentice in Washington; Editing by Shailesh Kuber)
