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Matthias Knab, Opalesque: The U.S. Securities and Exchange Commission has charged investment advisers Anson Funds Management, LP and Anson Advisors, Inc. for failing to properly disclose their investment strategy of working with activist short sellers and for related compliance failures.
According to the SEC's order, from at least 2018 through 2023, the private placement memorandum (PPM) for Anson's flagship fund described a short selling strategy but omitted the material fact that the strategy involved collaborating with activist short sellers. Anson would typically take short positions in companies targeted by the short seller's bearish reports, and the funds would often cover their shorts for a profit after the reports were released and the stock prices fell. In some cases, Anson had agreements to share a portion of the trading profits with the short sellers.
The SEC found that omitting this information rendered the descriptions of Anson's short selling strategy in the PPM misleading to investors. In addition, Anson Funds inaccurately recorded over $1 million in payments to one short seller as being for third-party research services. The firm also failed to implement its compliance policies and procedures requiring accurate disclosure of fund strategies.
As a result, Anson Advisors and Anson Funds were found to have violated antifraud provisions of the Investment Advisers Act, while Anson Funds additionally violated books and records and com...................... To view our full article Click here
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