Short-sellers have endured a rotten 2021 and to cap it all, they now face an investigation by the US Department of Justice. Despite an important role in financial markets, the tactics of some funds will once again be under scrutiny.
The criminal investigation will look at research reports issued by short-sellers and whether they have used their relationships to depress stock prices, according to reports of the probe. The DoJ did not immediately respond to a request for comment.
Small investors on Reddit, where much of the hostility towards hedge funds during the GameStop frenzy earlier this year was voiced, reacted to the news with a mixture of glee and scepticism that any action would be taken as a result of the probe. “Good! It’s long bout time for some heads to roll!!!” wrote one Redditor.