Can you commission a short report then takeover said shorted company?
Was just wondering what the rules around this are in the US, but would it hypothetically be legal for a potential acquirer to commission a short report from a research firm (e.g. Hindenburg) on a certain company where it would be hard to disprove / prove the reports claims (think speculative tech e.g. Twitter) and then once the share price falls (say 20-30%) in response to the report lob a takeover offer at a premium to the reduced price in the following days post-report?
Happy to entertain discussion / thoughts around this? Might be a bit dumb here in not seeing any clear breaches of public market rules so please let me know if so.
Looks like you don't know shit about Hindenburg. Commission a short report lmfao
Hindenburg is one of the best of the best in deep research investments, they are absolutely not selling reports lmao.
The whole reason stuff tanks when Hindenburg gets involved is because their research is so reputable - in-depth with varied claims, insider interviews and documents to back it up. The Twitter report was not a matter of proving/disproving speculative tech, they just rightly determined Musk would try to walk away from the deal.
But to answer your question - no, some questionably researched short report will not tank most stocks by 30%. You'd have to have hard, undisputable evidence like Hidenburg does. And even if this hypothetically happened, the shareholders of the target could sue you for manipulating the stock.
Thanks this was helpful - and sorry I wasn't too aware of Hindenburg's reputation in the US (just saw Twitter and also the subsequent short on Adani which went to court where Adani tried to argue that their short report was misleading and deceptive). I should have clarified that my hypothetical was to just try ask if any research firm (more likely a dodgy one) that operates in the same industry as Hindenburg (but without the reputation) could be able to partake in something like agreeing to write a short report on a stock for an acquiror and then for that same acquiror to capitalise on the report to acquire the company at some discount (thinking this would be very hard to prove that they were colluding). That way both the research firm and acquiror win (research firm by shorting then covering the shorts within a day or two and acquiror by being able to buy business for less).
Nevertheless, your answer to that hypothetical was really useful and helps clear things up for me! Thanks!
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