Federal prosecutors are reportedly ramping up a probe into the activities of short sellers, serving subpoenas and seizing hard drives and mobile phones of prominent “activist” short sellers.
What Happened? In a story originally reported by Bloomberg News last year, federal investigators have subpoenaed nearly 30 hedge funds and other short sellers as part of an investigation into potential illegal trading activities.
On Wednesday, the Wall Street Journal reported that investigators have seized records and devices from prominent short seller Carson Block, founder of Muddy Waters Research.
Related Link: Stanphyl Capital’s Value Stock Pair Trade: Short Tesla, Long GM & Volkswagen
Why It’s Important: Short selling has always been a controversial topic on Wall Street. Most veteran investors and finance experts view short selling as an important tool in correcting stock prices that have become overinflated due to hype …
