This Canadian investor in India has ties to Hindenburg Research
What's the story
Anson Funds, a Toronto-based hedge fund which is under investigation for alleged collusion with short-seller Hindenburg Research, is registered as a foreign portfolio investor (FPI) in India.
The hedge fund has two FPIs in the country—Anson Funds Management LP, Texas, and Anson Investments Master Fund LP, Cayman Islands.
This information was revealed through depository data.
Collaboration claims
Alleged collusion with Hindenburg
Nate Anderson, the founder of Hindenburg Research who recently announced the firm's dissolution, is believed to have worked with hedge funds including Anson Capital, in preparing reports targeting specific companies.
These allegations, reported by Canadian news outlet The Markets Fraud Portal, are based on court documents filed in a defamation lawsuit at the Ontario Superior Court.
The exact nature of Anson Funds's involvement in short positions on Adani Group companies before Hindenburg's report release remains unclear.
License implications
Impact on FPI license in India
The ongoing investigation into Anson Funds could also have an impact on its FPI license in India.
Legal experts say any negative outcome from the trial might affect its Indian FPI license.
The Securities and Exchange Board of India (SEBI) requires FPIs to maintain a 'fit and proper' status under its regulations.
A major misconduct by the fund or its key personnel could risk this status.
Research sharing
Anson Funds's CIO acknowledges sharing research
Moez Kassam, Anson's Chief Investment Officer (CIO), has admitted in court that his company shared research with various sources, including Anderson.
However, Hindenburg has consistently maintained that Anson Funds did not have editorial control over its reports.
In 2024, the US Securities Exchange Commission (SEC) fined two entities of the Anson group a total of $2.5 million for collaborating with "an activist short publisher."
Regulatory penalties
SEC's action against Anson Funds
The SEC's action stemmed from findings that Anson had agreed to pay a cut of trading profits to the top official of the short-seller.
In 2018, Anson Advisors had urged the short-seller to publish a negative report on Namaste Technologies, a Canadian-listed company.
This resulted in the dismissal of Namaste Technologies's CEO Sean Dollinger in February 2019.