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Who is Hindenburg, the firm targeting India’s Adani?

FILE- Adani group Chairman Gautam Adani speaks during the inauguration of the 9th Vibrant Gujarat Global Summit in Gandhinagar, India, Jan. 18, 2019. Hindenburg Research is a financial research firm with an explosive name and a track record of sending the stock prices of its targets tumbling. It’s back in the headlines for taking on one of the world’s richest men, Indian coal mining tycoon Gautam Adani. Last week it accused the Adani Group, India’s second biggest conglomerate, of a brazen stock manipulation and accounting fraud scheme. (AP Photo/Ajit Solanki, File)

FILE- Adani Group Chairman Gautam Adani attends the ‘Invest Karnataka 2016 - Global Investors Meet’ in Bangalore, India, Feb. 3, 2016. Hindenburg Research is a financial research firm with an explosive name and a track record of sending the stock prices of its targets tumbling. It’s back in the headlines for taking on one of the world’s richest men, Indian coal mining tycoon Gautam Adani. Last week it accused the Adani Group, India’s second biggest conglomerate, of a brazen stock manipulation and accounting fraud scheme. (AP Photo/Aijaz Rahi, File)

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NEW YORK (AP) — Hindenburg Research, the financial research firm with an explosive name and a track record of sending the stock prices of its targets tumbling, is taking on one of the world’s richest men .

Hindenburg is back in the headlines after last week accusing Indian conglomerate Adani Group of “a brazen stock manipulation and accounting fraud scheme.” It cited two years of research, including talks with former Adani senior executives and reviews of thousands of documents.

The Adani Group has blasted the accusations , calling them “a malicious combination of selective misinformation and stale, baseless and discredited allegations that have been tested and rejected by India’s highest courts.”

Nevertheless, Hindenburg’s scorching allegations have caused the fortune of Adani Group’s founder, Gautam Adani, to slide by nearly $47 billion in just over a week, according to the Bloomberg Billionaires index. Here’s a look at the firm behind all the movement:

WHAT IS IT?

Hindenburg says it specializes in “forensic financial research.” In layman’s terms, it looks for corruption or fraud in the business world, such as accounting irregularities and bad actors in management.

Hindenburg has even come to be known as Ponzi hunters in some circles, according to the Washington Post, which detailed how it helped bring down an alleged $500 million scheme that targeted Mormons.

WHERE DID ITS NAME COME FROM?

The firm says it sees the Hindenburg, the airship that famously caught fire in the 1930s to the cry of “Oh, the humanity,” as the “epitome of a totally man-made, totally avoidable disaster.” It says it looks for similar disasters in financial markets “before they lure in more unsuspecting victims.”

WHO ELSE HAS HINDENBURG GONE AFTER?

It’s perhaps most famous for a 2020 report on Nikola, a company in the electric-vehicle industry whose founder Hindenburg said made misleading claims to ink partnerships with top auto companies hungry to catch up to Tesla.

Among its allegations, Hindenburg accused Nikola of staging a video to calm skepticism about its truck, one that showed the vehicle cruising on a road. Hindenburg said the video was actually just showing the truck rolling down a hill after getting towed to the top.

WHAT HAS COME OF SUCH ACCUSATIONS?

For Nikola, quick scrutiny from the government and investors.

The company and its founder, Trevor Milton, received grand jury subpoenas from the U.S Attorney’s office for the Southern District of New York and the N.Y. County District Attorney’s Office shortly after Hindenburg released its report.

The Securities and Exchange Commission also soon issued subpoenas to Nikola’s directors.

Milton was convicted this past October of charges he deceived investors with exaggerated claims about his company’s progress in producing zero-emission 18-wheel trucks fueled by electricity or hydrogen.

And Nikola in late 2021 agreed to pay $125 million to settle SEC charges that it defrauded investors by misleading them about its products, technical advancements, and commercial prospects.

WHAT DOES HINDENBURG GET OUT OF THIS?

It can make money. In its Adani report, it said that it had taken a “short position in Adani Group Companies” through bonds that trade in the U.S. and other investments that trade outside India.

It has made similar “short” bets against other companies it published unflattering reports on. A “short” trade is a way for someone to make money if an investment’s price falls. Afterward, if the price of a company’s stock or bonds falls because of the negative attention from the report, Hindenburg can profit.

Such short sellers have been criticized for unfairly pushing down prices of stocks with potentially unfounded allegations. But proponents also call them a healthy part of a stock market , keeping stock prices in check and preventing them from running too high.

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Who is behind Hindenburg, the research firm targeting the Adani group?

Hindenburg Research’s bruising report accusing the Adani Gr oup of pulling off “ the largest con in corporate history ” has rattled India’s stock markets.

On Jan. 24, the New York-based forensic financial research firm disclosed its short positions on Adani companies , on the grounds of alleged accounting fraud and “brazen stock manipulation” over the course of decades. This has sent shares of the company spiraling down into a deep red zone in the past two days. So far, its seven listed entities have lost $39.4 billion of value .

Hindenburg Research has a track record of exposing corporate wrongdoings, including those of electric-truck maker Nikola Corporation , and of betting wisely on short and long investments , as it did with Twitter during the social media company’s long takeover drama with Elon Musk .

Hindenburg’s latest report , 106 pages in all, seeks answers to 88 questions related to discrepanc ies at Adani that it says it found across two years. The group’s chief, Indian industrialist Gautam Adani, is Asia’s richest man, with a net worth of roughly $120 billion.

The conglomerate’s legal head, Jatin Jalundhwala, in a statement on Jan. 26, said the company was “deeply disturbed” by the “intentional and reckless” attempt to tarnish Adani’s reputation ahead of a follow-on public offer that opened today (Jan. 27).

The extent of the damage triggered by Hindenburg’s findings is of widespread importance in India, where several public-sector banks and the country’s trust fund Life Insurance Corporation (LIC) hold large stakes in the company . If Adani collapses, it will hurt taxpayers in a big way.

What is Hindenburg Research?

Nathan Anderson founded Hindenburg Research in 2017 to analyze the equity, credit, and derivative markets. The name Hindenburg is derived from the 1937 airship explosion in New Jersey that killed 36 passengers.

The firm says on its website that it looks for “man-made disasters, ” such as accounting irregularities, mismanagement, and undisclosed related-party transactions . Its stated aim: to uncover corporate disasters before they “lure in more unsuspecting victims.”

Anderson’s firm has targeted at least 16 companies to date. It employs 10 people, mostly former journalists and analysts, Bloomberg reports.

Who is Hindenburg’s founder?

Anderson, 38, grew up in a small town in Connecticut and earned a degree in international business at the University of Connecticut.

Seeking a “diverse set of experiences,” as he put it to the Financial Times in 2021 , he worked as a paramed ic while studying abroad in Israel. His career in finance began at financial data company FactSet Research Systems. There, he worked with investment management companies, and found that “the processes across these firms is virtually the same, and not particularly incisive,” as he told the FT.

Stints in capital-raising at the firms Blue Heron Capital and Tangent Capital were Anderson’s first steps toward investigative research. His roles involved studying hedge funds and investment opportunities for high-net-worth individuals, according to his his LinkedIn profile .

His first big win was unearthing fraud at hedge fund Platinum Partners . For this case, Anderson teamed up with another senior financial fraud investigator, his mentor Harry Markopolos, who famously went after Bernard Madoff’s Ponzi scheme .

Why do corporates fear Anderson?

The short-seller is often not welcome in corporate circles, where short bets are c ommonly viewed as a means to attack companies and stunt their growth.

Short sellers, who profit when a targeted stock declines , have been a part of the market ever since the stocks came into existence. They create an important system of checks and balances in markets prone to froth.

According to Hindenburg’s report, the firm put together its short positions in Adani companies through US-traded bonds and non-Indian-traded derivative instruments. It also underscored the huge debt pile on the Adani books, which Hindenburg says has put the entire group on a “precarious financial footing.”

By the digits

$100 billion : Addition in Gautam Adani’s net worth in the past three years due to a meteoric rise in stock prices

$39.4 billion : Wealth erosion of Adani Group in a span of two trading days

38 : The number of shell entities identified by Hindenburg Research that are allegedly controlled by Gautam Adani’s elder brother Vinod Adani or other close associates

$17 billion : The combined amount of alleged money laundering, theft of taxpayer funds, and corruption that was previously investigated by f our government agencies that looked into Adani holdings

85%+: The amount of downside Hindenburg sees for Adani-listed firms “purely on fundamentals”

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Last Sane Man on Wall Street

Nathan anderson exposes — and bets against — corporate fraud. but short-selling a market this frothy can be ruinous..

This article was featured in One Great Story , New York ’s reading recommendation newsletter. Sign up here to get it nightly.

One day, a man with dreams of riches placed a truck on top of a hill. The vehicle was a big white tractor-trailer, a prototype built by an automotive start-up called Nikola . The company’s boastful founder, Trevor Milton , claimed it was the “holy grail” of the commercial-trucking industry, a semi that ran on hydrogen and was both green and powerful, capable of doing thousand-mile hauls with zero carbon emissions. In reality, the truck had no engine. It was towed up a straight two-lane road. Its driver released the brakes, and it rolled down the hill under the force of gravity, like a child’s wagon. The road had a 3 percent grade, gentle enough that with some creative camerawork, the prototype would appear to be barreling across a flat desert landscape.

On January 25, 2018, Nikola’s official Twitter account posted a swooshing 39-second video of the demonstration. “Behold,” it declared, “the Nikola One in motion.”

Four years and one federal criminal indictment later, the story of the engineless truck can be seen in many ways: as the high point of a scandal at an automaker that briefly had a market cap larger than Ford’s; as a manifestation of this era’s fake-it-till-you-make-it, flack-it-till-you- SPAC -it business ethos; as a cautionary tale of social media’s power to intoxicate the stock-trading masses; as yet another indicator that the market has become detached from reality; and maybe even as a big honking metaphor for an entire economy that is rolling down a hill, inflating, going deranged as crypto wizards conjure imaginary fortunes , companies without a hint of revenue reach multibillion-dollar valuations, and our richest men blast off into outer space .

On a practical level, though, the rolling truck was the killer detail — the spark that incinerated a high-flying stock to the career-making benefit of Nathan Anderson, the proprietor of Hindenburg Research .

Anderson belongs to a cranky cohort of “activist” short sellers. They make money by taking positions in the stocks of shaky or shady companies, which pay off if the price goes down — an outcome the shorts hasten with public attacks, publishing investigations on their web platforms and blasting away at their targets (and sometimes at one another) on Twitter. To their many powerful enemies, they are little more than internet trolls, a fun-house-mirror image of the day-trading dumbasses on Reddit who drive up meme stocks for the lolz. Anderson prefers to think of himself as a private detective, identifying mischief and malfeasance that might otherwise go undetected by snoozing regulators. He used to poke around in shadowy corners, but lately he has been seeing fraud sitting right in the blazing light of day.

“The scale of it is quite massive,” the lanky, bearded 37-year-old told me when we first met one sultry morning in August. “I don’t think any system can sustain itself with that scale of grifts happening.”

A hurricane was on the way, and we had arranged to meet up for breakfast at a café near his apartment on the Upper West Side. “The market’s crazy,” Anderson said laconically. “ Dogecoin is worth, like, $40 billion. In this economy, a company, regardless of whether it is complete trash, can shoot up 1,000 percent.” Anderson said he was just back from a conference in San Francisco, a rare in-person gathering of around 30 short-selling activists — “the remaining survivors,” he joked, of a market that had been crushing contrarians.

It’s an axiom of short sellers that you can be right about the stock but ruined by the trade. If a stock ends up rising despite the evidence assembled against it, a short can end up taking huge losses — a danger that has led many otherwise risk-addicted financiers to forsake the practice. Every so often, though, a short bet pays off so well that the rest of the world takes notice. In Anderson’s case, that big score was Nikola. In 2020, Hindenburg released a devastating report on the truck-maker, alleging that the company — which at its peak was worth $34 billion — was “an intricate fraud built on dozens of lies.” The report sent Nikola’s stock price plummeting and prompted a criminal investigation that culminated in Milton’s indictment by federal prosecutors in Manhattan this past July. For Anderson, it was the highlight of an astonishing hot streak. Hindenburg had registered five of the top-ten short calls of 2020, according to the research firm Breakout Point.

Although those bets paid off well and Anderson says he’s “been able to make a very good living,” he’s still a small fry by Wall Street standards. He doesn’t manage a fund. He probably could be making more money trading muni bonds. But he’s had a lot more fun on his finance-world capers. Anderson has smoked out scammy cannabis operations. He has investigated alleged ties between a Colombian drug cartel and the owners of a glass company profiting from Miami’s pandemic building boom. For a report on a dubious biotech firm, he infiltrated a sales meeting by feigning a sports injury. He has delved into old-fashioned pump-and-dumps, COVID profiteers, and a do-it-yourself orthodontics scheme.

The recent craze in special-purpose acquisition companies — vehicles for businesses to go public via a merger without the usual regulatory oversight — has created a target-rich environment. Take the case of HF Foods Group , which owns warehouses that supply Chinese restaurants across the U.S. In 2020, Anderson published a report alleging that the company’s share price had been pushed up through questionable merger activity as well as a pattern of “highly irregular transactions.” One company subsidiary seemed to have been used to assemble a fleet of Ferraris. Some appeared to sport crude vanity tags (IPULL, DIKTAT0R, IMHUMBLE) and showed up in the Instagram feed of the chief executive’s son. (HF Foods later disclosed that it is under investigation by the Securities and Exchange Commission; the company did not respond to a request for comment.)

“Nate was the success story of last year,” Carson Block, another well-known activist short, tells me. That success was all the more remarkable in a market that has driven many other shorts, including Block, to the brink of despair. “We can find compelling stories all day long, things that we think are totally fucked up,” Block says. “But it’s a lot harder to get investors to think that it matters.”

After all, you have to be a little crazy to bet against a market that has proved impervious to inflation , supply-chain instability, and a plague that has killed millions of people . You have to be even crazier to do it in defiance of the stresses that come with being a short seller, which can include (in reverse order of annoyance) being yelled at by Jim Cramer, being doxed, being hacked, fending off shadowy private-intelligence firms, defamation lawsuits, and the distinct possibility that, rather than following up on your findings, government regulators will instead start investigating you. And after all that, your warnings may still be ignored or, even worse, trigger a counterreaction among bullish investors that could end up costing you everything.

“Yeah,” Anderson says. “That’s the torture.”

Two months after our August meeting, I saw Anderson again, this time in a fifth-floor apartment he uses as an office. Children were playing down in the courtyard, and a brisk breeze carried a glistening bubble past his window. “A lot of investors prefer the market to be sort of this mass hallucination,” Anderson said. On the screen of his laptop, a ticker showed that bitcoin was trading at $63,682.60, heading toward an all-time high. “The market is designed to be a place where these scarce resources of society — capital, labor, materials — are allocated to their most efficient use,” he said. “But it has just become this otherworldly casino, which is disconnected from the real world.”

Anderson, wearing a dark T-shirt, jeans, and polka-dot socks, was fiddling with the wording of a new post to the Hindenburg website. Another researcher was nearby, one of eight full- and part-time employees who work for him. Besides serving as Hindenburg’s headquarters, the apartment is a storage space for three bicycles that belong to him, his fiancée, and his daughter.

Anderson was on the case of Tether Holdings, the company that created a cryptocurrency called tether . Tether is a stable-coin, or a unit of crypto that is pegged to something of real-world value — in this case, the U.S. dollar. In theory, each tether is backed by a real dollar held by Tether Holdings, which makes it a useful bit of the infrastructure undergirding the exchange of digital currencies, such as bitcoin and dogecoin. But a recent Bloomberg Businessweek investigation had raised serious questions about how tethered the coins really are, including speculation that a supposedly rock-solid portfolio of some $30 billion in short-term commercial loans might not be real.

Anderson said that Hindenburg had been looking into this possibly phantom portfolio. “From a research perspective, it’s hard to find something that may not exist,” Anderson said. “You have to canvass the world to find something that is not there.” The post on his screen was headlined “Hindenburg Research Announces $1,000,000 Bounty for Details on Tether’s Backing.” The bounty’s terms stated that the firm wanted to know whether tether’s “actual backing may have differed from its public disclosures.”

Short sellers usually play the stock market, but you can theoretically short almost anything that has a fluctuating value, including currencies. ( George Soros famously made a fortune by betting against the British pound.) But Anderson said he did not have a direct profit motive for offering the bounty. He claimed he was acting out of curiosity and general principle. “It’s unclear whether it’s something that can be monetized,” he said. “But it’s definitely something we want to solve.” His cursor arrow hovered over the blue button that would publish the post. He clicked.

Anderson said he was anticipating an uproar on Twitter. “It’s going to be an absolute disaster,” he predicted with a note of relish. Sure enough, while the bounty has so far yielded no actionable information, it did trigger a vociferous response from Tether Holdings, which issued a statement calling it a “pathetic” attempt “to discredit not just Tether, but an entire movement.” The company’s CTO tweeted out a meme of “the Tether Truthooooor,” a red-eyed, stubble-bearded weirdo with Hindenburg’s logo superimposed on his forehead. For Anderson, that seemed to be the stunt’s most immediate payoff: eliciting a reaction from the cryptomaniacs on social media that aligned nicely with his firm’s chaotic-good brand identity.

Like many shorts, Anderson was drawn to the downside both by personality and by chance. He grew up in Connecticut, where his father was a professor and a family therapist and his mother was a nurse and a teacher. He went to UConn, served as an ambulance medic in Israel, then got into finance, working as an intermediary at boutique firms that connected hedge funds with wealthy individuals. It was in this capacity, around the end of 2014, that a contact asked him to check out a fund called Platinum Partners.

Platinum managed around $1.4 billion and claimed average returns of 17 percent a year — quite good. Anderson, impressed, started investigating. Platinum’s largest holding turned out to be an oil-exploration company that was under a criminal investigation related to a fatal platform explosion. It had also invested in a Florida Ponzi scheme and in an insurer that regulators had accused of seeking to “profit from the imminent deaths of terminally ill patients.”

Anderson thought Platinum looked fraudulent. He put together a 67-page document summarizing his analysis. “I was upset,” Anderson said. “I didn’t know what to do about it, but I knew I wanted to stop it.” His financial-industry clients didn’t really care, so he tried to interest journalists. He sought advice from Harry Markopolos, the analyst who first sounded alarms — to little avail — about Bernie Madoff. Markopolos introduced him to a lawyer who helped to prepare a submission to the SEC under the regulator’s whistleblower program. Within months, the FBI raided Platinum’s office, and two top executives were eventually convicted on securities-fraud charges. “Which was pretty cool,” Anderson said. “Because you don’t see any impact a lot of times.”

Under the SEC program, whistleblowers are eligible for a cut of up to 30 percent of any fines collected as a result of information they provide, which can amount to millions of dollars. But Anderson soon discovered that the SEC works at an inching pace. (He has yet to receive any award for his work exposing Platinum.) Anderson was now operating a small brokerage and a software firm that offered due-diligence services to hedge funds. He struggled to make a living. In 2017, his landlord filed suit to evict him from his Inwood apartment. His brokerage reported a net-capital balance of just $58,482 at the end of the year.

Anderson had hoped to make a business out of filing whistleblower claims, selling 5 or 10 percent stakes in the potential awards to investors to create short-term income. Short selling started as a secret side hustle. He would post anonymously on the crowdsourced website Seeking Alpha. He called himself Hindenburg Research to sound more authoritative, but it was just him.

In December 2017, early in Hindenburg’s existence, Anderson published a report on a Colorado biotech company that had abruptly pivoted into cryptocurrency, renaming itself Riot Blockchain. Barry Honig, a colorful Florida investor whom Anderson describes as the “LeBron James of pump-and-dumps,” was the company’s largest shareholder. (“What is the definition of a pump-and-dump?” Honig asked rhetorically when reached on his cell phone. In 2018, the SEC charged Honig and the CEO of Riot Blockchain with fraud. Both men later settled without admitting guilt and were barred from trading penny stocks. Riot Blockchain itself was not implicated.)

“I took a very big position” in Riot Blockchain, Anderson said. “And I had a very small account. I had a very, very young child at home, and I wasn’t doing that well. But I believed so strongly in this thesis, and the evidence was dead-on, unassailable. I published — and the stock went up, and it kept going up.”

Anderson’s analysis was sound, but no one was listening. He recalls that beneath one blog post about his report, a commenter wrote, “Who cares if it’s a scam? It’s blockchain, it’s going up.”

Short selling has been around, in one form or another, for as long as there have been speculators and dupes. The first truly famous short was probably Jesse Livermore, the “Boy Plunger,” an early-20th-century trader who made $100 million betting against stocks before the crash of 1929 but later lost it all and shot himself in the cloakroom of the Sherry-Netherland, leaving a note to his wife that concluded, “I am a failure.” The profession tends to attract volatile characters. “Shorting is just a notoriously difficult business,” says the former hedge-fund manager Whitney Tilson, who got out of the game. It involves taking a lot of risk for what is, by finance standards, relatively little upside. The people who do it often behave as if conflict were its own reward.

When it works, defying the foolish crowds can make you look like a genius, as it did for the traders who made billions betting against the mortgage bubble in 2008, some of whom ended up being immortalized in the book and movie The Big Short . But it’s a high-anxiety activity. The best thing that can happen is that a security becomes worthless, an outcome the shorts call “going to zero.” But if its price rises, traders can lose much more money than they stood to make from a victory. “Mathematically,” Tilson says, repeating a common adage, “shorting is a business where the most you can make is 100 percent, and your potential losses are infinity.”

A trader might have a portfolio of ten short positions. “You can be right on eight of them,” Tilson says, “but if one of them is Tesla, you’ve just been blown up.” This is not a hypothetical. A lot of shorts — including Tilson — have bet wrong on Tesla. Their skepticism could yet be vindicated. Plenty of reasonable people question the sanity of a market that assigns Elon Musk’s electric-car company a value greater than that of almost every other automaker in the world combined. But as somebody — maybe John Maynard Keynes, though the attribution is iffy — once said, the market can remain irrational longer than you can stay solvent. No wonder hedge-fund managers like Bill Ackman , who are famous for some of their big shorts, have decided there are easier ways to make their billions. “It’s not worth the brain damage,” Ackman once explained.

Their departure has opened the field to smaller predators with names like Scorpion Capital and Wolfpack Research. Rather than shorting stocks simply because they are overvalued, they focus on rooting out corporate wrongdoing. The model is not new. In its modern incarnation, it traces back at least three decades to Jim Chanos , the legendary founder of the fund Kynikos Associates. (It is named for the original Greek Cynics.) Chanos is best known for being the guy who drew attention to the shifty accounting at the energy-trading firm Enron, which generated a scandal that collapsed the company in 2001. A new generation of activists, however, has given the old method an extremely online twist. Instead of simply handing over their research to reporters and hoping for the worst, they publish on their own platforms and hound their targets on social media. They say they are meting out justice in a realm in which the authorities can be sluggish and easily outwitted.

“If the SEC isn’t going to take action and the DOJ isn’t going to take action against these bad actors,” says Christopher Carey, a former newspaper reporter who runs a firm called Sharesleuth, “really the only way is exposure to the market.”

A cynic might point out that this commitment to transparency can be inconsistent. Activist-research firms, including Hindenburg, tend to get evasive when it comes to some basic questions, like who supplies them with information and who, if anyone, backs their positions. (It takes serious money to make serious money as a short.) The activists hunt in packs, leading inevitably to allegations of conspiracy and stock manipulation. Adding to the murky atmosphere, some of them, like Anderson, start off by posting anonymously. He describes that as a practical defense: “You are just one guy with no assets, just doing research on your own, squaring off against incredibly well-resourced, powerful corporations and investment firms.”

Some critics of the activist approach contend that short-research firms do little of the actual detective work but rather act as fronts for investment firms that possess damaging information and an interest in maintaining a deniable distance. The loudest voice advancing this theory, Marc Cohodes, is a veteran short seller who says newcomers like Anderson are doing business the wrong way. Cohodes, a polarizing figure in the industry, ran a short-oriented hedge fund he shut down after the 2008 financial crisis and now tweets crankily from a ranch in Montana. “How are these nobodies with very little experience or training coming in and knocking the ball out of the park?” he asks. “Hedge funds, they do the deep work, and they have the money. In order for them to get the story out, they give it to these guys.”

There is little doubt that short researchers often have undisclosed relationships with interested parties — for example, angry ex-employees looking to take down their old firm. In one high-profile case this past summer, a researcher was compelled by litigation to admit that, in collaboration with a Dallas-based hedge fund, he had published an error-filled report that temporarily tanked a stock. In its most extreme form, Cohodes argues, the relationship allows sinister traders to take short positions and quickly cover them for a profit on the release of distorted negative reports, a strategy he calls “smash and grab.”

The claims made by Cohodes are echoed by other adversaries of the activist model and appear to have recently gotten the attention of the authorities. In December, Bloomberg News reported that the Department of Justice had initiated an “expansive criminal investigation” into allegations of “symbiotic relationships” between hedge funds and activist researchers and is examining prominent players in the industry, including Block’s firm, Muddy Waters Capital. (“We make enemies of powerful and wealthy people who propagate false narratives about our industry,” Block tells me via a spokesman, “which we assume led to this investigation.”)

The full scope of the inquiry is unknown, and Anderson says Hindenburg has received no indication it is a subject of the DOJ’s scrutiny. He declines to describe his stock-trading strategies in detail, except to say he collaborates with a group of roughly ten “investors” — presumably wealthy individuals or financial institutions, although he won’t name names. For each investigation, he may take on one backer. The investor gets an advance look at the report that allows that party to take a short position, and Hindenburg takes a cut of the profits on the trade. Anderson says his investors sometimes pass along tips about potential targets. “We develop our own leads, and sometimes market participants share leads with us,” he says. But he claims nothing is spoon-fed: “We do our own research.” And if a lead doesn’t pan out, he says, Hindenburg doesn’t publish anything.

“Color me skeptical,” says Cohodes, who refuses to believe that a modestly sized shop like Anderson’s could produce such a large volume of destructive information. “It is impossible to put out the research that Nate did in 2020 unless the shit was given to him.” When Anderson heard Cohodes was questioning his work, he reached out, offering to explain his methods, but got nowhere. Anderson then prepared a characteristically exhaustive 70-page document called “The Strangest Fight We Never Picked,” which laid out the evidence for what he believes is a “bizarre behind-the-scenes war” that Cohodes is waging against him. Cohodes denies having a vendetta, but he says he thinks Hindenburg and other activist researchers may sometimes be engaging in behavior that is damaging and potentially illegal. “I think that what these guys do is bad,” he says, “and if they were ever investigated, I think they’d be in a lot of trouble.”

From the beginning, Anderson has been defending Hindenburg against accusations of stock manipulation. His very first report, which identified fishy transactions at a publicly listed Bollywood production company called Eros International, led to a defamation lawsuit. Eros alleged that Hindenburg and a cabal of other short sellers were victimizing the company in a “short and distort” scheme. The lawsuit quickly revealed that Anderson was the man behind Hindenburg, but it was ultimately dismissed.

Years later, after he was more firmly established, Anderson got his revenge. Hindenburg hired a private investigator to check out an Indian production company that had received $153 million in payments from Eros. It had produced little, and it turned out to be run by an in-law of Eros’s chairman and CEO. Its tiny office was in an apartment building in a downscale neighborhood in Mumbai. In 2019, Hindenburg issued a follow-up report disclosing its findings and predicting the stock would “end up worthless.” Eros traded at around $12 on the NYSE at the time Anderson first started to investigate it. It is now down to 25 cents a share.

On February 9, 2020, as the S&P 500 index vaulted to an all-time high, Anderson was following the spread of a new coronavirus in China. “I said we’d leave New York when there were ten confirmed cases,” he recalls. “I think we left when there were seven.” He retreated to an Airbnb — a renovated barn — near his parents’ house in Connecticut and waited for the long-predicted market correction. Anderson says he was anticipating it would put a lot of overvalued companies out of business, “a healthy but painful process,” which he felt would be cleansing for the economy. On March 12, as the world locked down, the stock market suffered its worst one-day decline since the crash of 1987.

From the safety of the barn, Anderson took to Twitter, where his voice-of-doom persona (@ClarityToast) had developed a healthy following. “S&P hits new lows … as Trump and the Fed try to paper over everything,” he tweeted on March 13. “It’s not working anymore, folks.”

But then it did work. The federal government opened its macroeconomic sluices, printing trillions of dollars. The stock indexes stabilized and before long were ascending past their previous highs. Newbie investors, killing time during the lockdown, started playing with stocks on apps like Robinhood . “Getting the impression that a large portion of those stimulus checks went straight into Robinhood accounts to buy YOLO calls,” Anderson tweeted incredulously that April. “The Fed just turned around and reinflated the biggest asset bubble of all time,” he says now. “At that point, it was just a question of how crazy it could get.”

Then, on June 9, 2020, Anderson came across a tweet from Milton. His truck company, Nikola, had gone public on NASDAQ five days before: “I’ve wanted to say this my whole adult life; $NKLA is now worth more than Ford and [Fiat Chrysler]. Nipping on the heels of GM …”

“He basically was saying that, like, he had overcome two of the largest automobile-makers in history, which have collectively produced millions of vehicles,” Anderson says. “And I just remember looking at that and thinking how completely unearned that statement was.”

In press coverage, Milton was often described as a “serial entrepreneur,” a polite circumlocution. He had no engineering background and had gotten into electric vehicles after running a home-alarm-systems franchise and a classified-ad website in his home state of Utah. He launched his truck business in 2014, naming it Nikola in homage to Tesla and, it seems, in imitation of Musk. (“There’s two people in this world who know EVs better than anyone,” Milton once said, “and that’s Elon and myself.”) Unlike Tesla, though, Nikola had yet to sell or lease a single vehicle.

Milton had promised to revolutionize the carbon-spewing trucking industry by making hydrogen-fuel-cell vehicles that were as powerful as big diesel rigs, capable of hauling “80,000 pounds more than 1,000 miles” without stopping to refuel. An impressive roster of investors had bought into his vision. The most prominent was Jeff Ubben, a billionaire who had recently left his hedge fund after decades of pressuring companies to increase shareholder returns, saying he wanted to make investments that contributed to the greater good. (“I’m on a crusade,” Ubben said in 2020. “I’ve got five years to fix the harm I’ve done.”) Nikola raised more than $500 million in venture capital from Ubben and others. Then, in 2020, it went public via a SPAC , merging with a publicly traded shell company that was run by a former top executive at GM. The deal created a huge windfall for everyone involved. Milton received a $70 million cash payment and became the public company’s largest shareholder. The day he wrote his fateful tweet, he was worth more than $8 billion on paper.

Anderson started to poke around on the internet, where Milton had left a long trail of self-promoting bread crumbs. One reason that SPAC mergers have become so popular is that they dodge SEC regulations that require companies to observe a “quiet period” around the time of their IPO. Milton tweeted 2,283 times, an average of eight or nine posts a day, during the first nine months of 2020. Internal communications cited by the government in subsequent legal proceedings show that he was focused intensely on influencing Robinhood investors via social media.

On YouTube, Anderson watched a video of a stagy industry event Milton had held at his Salt Lake City headquarters in 2016. The chief executive whizzed onstage in an electric off-road vehicle, emanating booyah energy. Wearing a pair of low-slung jeans, he spoke in front of a semi, the Nikola One, which was covered with a huge white sheet. “For every doubter out there who said, ‘There’s no way this is true; how could that be possible?,’ we’ve done it,” Milton said. Often, prototypes presented at trade shows are dummies known as “pushers.” Milton invited the audience, which included the governor of Utah, to “see the truck, know it’s real, touch it, feel how sturdy it is. You’re going to see that this is a real truck. This is not a pusher.”

From the beginning, there had been skepticism about his claims within the automotive industry. “Trevor Milton Wants to Revolutionize Trucking, and He Doesn’t Care If You Don’t Believe Him,” read the headline of a 2016 profile in the trade magazine Commercial Carrier Journal. Four years later, shortly after Nikola went public, Bloomberg News published an anonymously sourced story reporting that the Nikola One prototype at the 2016 unveiling was not actually a functioning vehicle. Milton responded on Twitter, calling the reporter, Edward Ludlow, a “deceiver” and a “jackjob” and saying he should be fired. Then he texted one of his board members: “Share value went up after my response.”

It was around this time that Anderson talked with Mark Pugsley, an attorney he knew in Utah who specializes in representing whistleblowers. Pugsley told Anderson that he represented three people who were preparing to file a whistleblowing complaint against Nikola with the SEC. Milton “had left a trail of people in his wake who he had just screwed over,” Pugsley says. He wouldn’t identify his clients to me by name, but he says they were familiar with Nikola and its technology. During the pandemic, one of them had hunkered down in a garage filled with documents and whiteboards in an obsessive quest to prove Milton was a phony.

“They were all experts in the area that Nikola purported to be in,” Pugsley says. “They were watching the ridiculous statements and thinking, This is total bullshit. ”

Anderson evaluated the information the whistleblowers had compiled. Some claims were easy to fact-check. Milton had said that Nikola’s trucks were to be powered by batteries and hydrogen-fuel cells. A little research revealed that Nikola had filed a federal lawsuit against a battery manufacturer that it had agreed to acquire, claiming it had only recently discovered the company’s president, a former consultant to NASA, was under indictment for putting his visits to prostitutes on his government expense account. As for hydrogen, Anderson was able to confirm that Nikola’s director of hydrogen production was Milton’s brother, Travis. His job before joining Nikola? Paving driveways in Hawaii.

Despite Milton’s boasts that the Nikola One was “not a pusher,” it lacked basic components — including gears and motors — at the time of its unveiling. An inside source told Hindenburg that workers had scrambled to assemble it on the eve of the show with off-the-shelf parts from a hardware store. It had to be towed onto the stage for the event. Its electrical components, including systems in the cab that Milton demonstrated, were powered by an electrical cable running beneath the stage.

The pièce de résistance, though, was the video of the rolling truck. The company had shot the commercial in cooperation with one of its parts suppliers, and it was Milton who had insisted that it show the Nikola One “in motion,” company executives later told a law firm that conducted an internal investigation. Some insiders insist this was a common automotive-industry practice. (Every automobile company in the world is a liar, Nikola’s head of manufacturing told the internal investigation, “if rolling a truck down a hill is a fabrication.”) But Anderson immediately recognized the potency of the anecdote. “The truck had zero horsepower,” he says.

Acting on information from a former employee, Pugsley’s clients managed to pinpoint the road, a deserted stretch of the Mormon Trail. As a test, one of Hindenburg’s informants drove to the top of the hill, put his Honda SUV in neutral, and let it roll. The SUV reached a maximum speed of 56 miles per hour.

Meanwhile, Milton was obliviously tweeting away. He had recently announced an ambitious pivot into making consumer vehicles, posting a CGI rendering of a hybrid pickup truck called the Badger. He claimed to have “literally built the most badass pickup truck the world had ever seen,” a “fully functioning” prototype that could “whoop a Ford F-150.” Shortly after Nikola went public, Milton tweeted out a new feature: Water produced as a by-product of the hydrogen-fuel cells would feed into a fountain in the cab, producing “cold, clean, pure drinking water.” (A few days later, Milton allegedly Googled a question: “Can you drink water from a fuel cell?”)

In fact, there was no working pickup prototype. But in September 2020, Nikola announced a deal with GM. In return for $2 billion in Nikola stock, the Detroit automaker would engineer and manufacture the Badger using its own technology. Milton had faked it, and now GM was going to make it. Nikola’s share price shot up 30 percent after the deal was announced.

Two days later, Hindenburg published. Pugsley and his clients were waiting, tracking Nikola’s stock chart on their web browsers. They cheered as the line plunged. “It was a blast,” Pugsley says. “It was just a very rewarding experience to watch it come out and watch the stock tank.”

Afterward, everyone wanted to know how Hindenburg had done it. Anderson says that private investigators — hired by Milton, he assumed — went to elaborate lengths to identify his sources. A rumor went around the short-selling world that Musk, who also plans to make trucks, had somehow ordered up the Nikola hit.

Anderson laughs off the notion that he is a puppet and defends the motivations of his sources. “I don’t think most whistleblowers and even short sellers, for that matter,” he says, “start with the idea that, like, Wow, this can be a great business; all I need to do is pick fights with corporate sociopaths, and I can do really well. ” In the Nikola case, he says, “it started, I think, just as abject horror that something this egregious and wrong could continue to fail forward and upward.”

Shorts see themselves as a force of correction restoring balance to the marketplace. But for every bet they win, there is a loser, someone who believed the stock was headed up. Over the past year, the eternal conflict between bulls and bears has turned into a social-media battle. “It’s not that different than the tribal warfare we see in the political sphere,” says Carey. The dynamic played out most dramatically in last year’s frenzy over GameStop . Rabblerousers on Reddit decided to coordinate what is known as a squeeze against traders who had shorted the beleaguered strip-mall retailer, driving up the price in order to force them to cover their positions at a loss. This was the first in a series of meme-stock rallies that seemed to be driven less by profit motives than by a mob mentality and a desire to strike a blow against predatory capitalism. After the GameStop squeeze, one of the best-known activists, who took heavy losses, announced he was giving up on publishing short research. It was just getting too dangerous to be a rationalist.

Anderson says it was a “bizarre period.” It was particularly agonizing because while he felt the anger was misdirected, he understood where it was coming from — it was the same thing that first drove him to become a whistleblower. “I think there was a very legitimate undercurrent of thinking that the elites or the wealthy had long manipulated the system to benefit themselves and disadvantage regular people,” he says. “And that’s something I strongly identify with because we spend most of our time trying to identify those people that manipulate the system.” The irony, in his view, was that “those guns were kind of trained on us, the short sellers.”

Lately, Anderson has been talking about taking Hindenburg in new directions that are not so clearly linked to stock speculation. He wants to turn its website into a platform for the kind of financial investigative journalism that the ailing news industry has largely abandoned. In recent months, he has kept me abreast of Hindenburg’s work on a forensic project involving an overseas conglomerate. “We just downloaded the entire Mauritius corporate registry,” he told me in late November. “It’s a pretty extensive web.” He was still figuring out how he would be able to profit from the investigation’s findings, whenever it ultimately came to completion.

Meanwhile, he has continued to watch Nikola’s stock, which remains one of his largest short positions. Milton resigned in the aftermath of Hindenburg’s report and an ensuing Me Too scandal — CNBC reported that two women had accused him of sexually abusing them as minors. GM scuttled the partnership deal, and the SEC began a fraud investigation of Nikola, which recently concluded with the company’s agreeing to pay a $125 million settlement, of which the whistleblowers in Utah are expecting a significant cut. (Nikola’s management and board members, including Ubben, declined to comment for this article, as did Milton, who has pleaded not guilty to the fraud charges. He has also denied the abuse allegations.) Milton’s indictment produced further damaging revelations about the state of the company’s technology, such as the allegation that, contrary to his claims to have discovered a way to produce hydrogen fuel at a quarter of the market price, “Nikola had never obtained a permit for, let alone constructed, a hydrogen production station, nor had it produced any hydrogen.”

Still, despite all that, Nikola’s stock had not gone to zero. Instead, it’s been hovering at around $10 a share, giving Nikola a capitalization of more than $4 billion. Milton has cashed out millions’ worth of stock, but he still owns enough of the company that he remains a billionaire, or close to it, on paper.

“I view that more as a reflection of the complete market insanity that we’re in now,” Anderson says. “Where pictures of digital tulips are trading for hundreds of thousands of dollars.”

This past fall, the electric-vehicle companies Lucid and Rivian, neither of which has sold more than a handful of automobiles, went public and instantly vaulted past GM in market value. Over just 12 trading days, Tesla gained nearly $400 billion in market capitalization in what Fortune declared to be the sharpest such jump in history. The S&P 500 has gained 40 percent since January 20, 2020, when the CDC identified the first case of COVID in the U.S. An average of three SPACs a day were going public in December, The Wall Street Journal reported, raising billions in capital from investors despite a dismal track record. (Three in four last year ended up trading below their initial offering price.) Donald Trump is getting in on the boom, naturally, striking a SPAC deal to raise money for his new media company, which was valued at roughly $2 billion in December. On January 6, the SPAC’s stock rose another 20 percent following the announcement that it will launch an app, Truth Social, on Presidents’ Day. And the truck just keeps rolling.

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Adani Defends Itself After Fraud Allegations. But the Real Victim May Be India’s Reputation

W hen you’re Asia’s richest man, logic dictates that the only way is down, but there was still something shocking about how Gautam Adani’s business empire imploded last week.

The Indian tycoon was left reeling after a Jan. 24 report by Hindenburg Research—a New York-based forensics research firm and short-seller—alleged decades of “brazen stock manipulation and accounting fraud” that amounted to the “biggest con in corporate history.”

Adani Group—India’s largest conglomerate with interests spanning ports, airports, manufacturing, and energy—denies the allegations and has threatened legal action against Hindenburg, which admits to taking a position to “short” (or speculate on the decline of) Adani stock.

Still, the allegations wiped more than $66 billion in market value from Adani’s business empire by Monday, as well as more than $30 billion from founder and chairman Gautam Adani’s personal fortune, according to Forbes . It’s reportedly the worst financial blow ever experienced by an Asian billionaire and knocked him from third to ninth in the global rich list.

Indian markets stopped selling some Adani stock on Friday to stem the rout, and the company replied with a 413-page rebuttal to the allegations on Sunday. They are serious. While Indian regulations require that any publicly listed company must have at least 25% outside shareholders, Hindenburg alleges that large stakes in Adani Group subsidiaries are held by offshore shell entities run by Adani stooges in places like Mauritius and Singapore, drastically inflating the group’s stock and therefore its ability to borrow and leverage. In response, Adani called Hindenburg’s accusations “baseless and discredited,” and “selective regurgitations of public disclosures or rhetorical innuendos coloring rumors as fact.”

Given the oversized role Adani Group plays in India’s economy, the controversy has political implications for Prime Minister Narendra Modi, who like Gautam Adani hails from India’s western state of Gujarat. The pair are known to be close associates since the 1990s and Modi used an airplane belonging to the Adani Group amid his victorious prime ministerial campaign in 2014. Since that time, Adani’s wealth has risen from an estimated $7 billion to $120 billion, according to the environmental scrutiny group AdaniWatch .

Ultimately, however, accusations of official complicity in Adani Group’s alleged malfeasance may prove most damaging, undermining investor confidence in India’s $3.2 trillion economy. According to the Hindenburg report, “issues of corruption permeate multiple layers of government,” especially calling out the Securities and Exchange Board of India, or SEBI. Adani is correct when it says that many specific accusations within the Hindenburg report had already been investigated and cleared by Indian courts. But the sustained market plunge nonetheless is indicative of a lack of investor trust in the nation’s institutions.

“This has created a major risk now, not only for the Adani Group, but for the entire [Indian] market,” says Hemindra Hazari, an independent banking and economics analyst. “Hindenburg is openly saying that your regulator is protecting the perpetrators instead of punishing them—and the market by penalizing the share prices has taken cognizance of the charges.”

Adani, 60, is perceived to be closer to Modi than any other Indian oligarch. He was born to a Gujarat textile merchant and, after dropping out of university, spent his early career as a scooter-riding plastics trader. He later dabbled in precious gems before his big break with the development of a deep-water port at Mundra, which today is India’s largest commercial port .

Adani expanded his holdings in infrastructure, logistics, and energy, especially coal-related businesses. Today, he is often referred to as India’s “king of coal,” though he recently diversified into media, too. In December, he controversially increased his stake in New Delhi Television, better known as NDTV, an iconic Indian television station and one of the only mainstream broadcasters still critical of the Modi government.

How damaging the Adani controversy may be to India’s state finances is hotly debated. On Friday, shares of India’s banks and the Life Insurance Corporation of India plunged. Jairam Ramesh, a leader of the opposition Congress Party, has highlighted how state-owned banks have lent twice as much to the Adani Group as private banks. “This irresponsibility has exposed [Indians] to financial risk,” he said in a statement .

Still, while noting that the total debt of the top five Adani Group companies had doubled in the four years ending last March, Hong Kong brokerage firm CLSA says that Indian banks make up less than just 38%, with most borrowing via bonds, commercial papers, financial institutions, and intergroup lending. “The Indian banking system is relatively insulated from any potential downside risks,” CLSA said.

Yet the risk of contagion and decimated confidence in Indian bourses remains very real. The timing of the allegations is particularly damaging coming just before a $2.5 billion share sale by the group’s flagship Adani Enterprises Ltd that stood to be India’s biggest ever primary follow-on public offering.

“We must closely track all public sector banks & [public sector undertakings] who are investing in Adani shares now to shore up their share price,” tweeted activist-lawyer Prashant Bhushan on Monday. “The Chairmen & directors of these must be held to account for putting our money at risk.”

This presents the Modi government with a choice: try to restore investor trust through a thorough house cleaning —and risk alienating a powerful ally—or stand by Adani and dismiss the allegations as the machinations of invidious foreigners. Tellingly, perhaps, the Adani Group’s rebuttal has already played the nationalism card, calling the Hindenburg report “a calculated attack on India, the independence, integrity and quality of Indian institutions, and the growth story and ambition of India.”

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Alison Frankel has covered high-stakes commercial litigation as a columnist for Reuters since 2011. A Dartmouth college graduate, she has worked as a journalist in New York covering the legal industry and the law for more than three decades. Before joining Reuters, she was a writer and editor at The American Lawyer. Frankel is the author of Double Eagle: The Epic Story of the World’s Most Valuable Coin.

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Here’s The Story Of The Billionaire Founder Behind Hindenburg Research’s Latest Short Selling Target

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Timur Turlov celebrates Freedom's debut on the Nasdaq in New York City.

The short seller Hindenburg has accused Kazakhstan-based brokerage Freedom Holding of fraudulent practices. Former employees who spoke with Forbes have their own beef with the company.

The short seller Hindenburg Research published its latest report on Tuesday, accusing Freedom Holding Corp., a Nasdaq-listed financial services company headquartered in Kazakhstan, of a litany of fraudulent and illegal activity.

One thing Hindenburg didn’t mention: the founder of Freedom Holding, Timur Turlov, 35, has been on Forbes ’ billionaires list since 2021, worth an estimated $3.2 billion as of Tuesday’s market close, down more than $100 million in a day. In 2021, Forbes highlighted the seemingly inexplicable runup in Freedom Holdings share price and some concerning issues about the way part of the brokerage was set up.

According to Hindenburg Research, Freedom Finance, the company’s stock brokerage, has allegedly been evading U.S. and European sanctions since Russia’s invasion of Ukraine by continuing to offer its services to Russia-based customers, including clients of firms targeted specifically for sanctions enforcement measures. (The company admitted to providing “brokerage services to certain individuals and entities who are subject to sanctions” in its annual report earlier this month.)

Hindenburg Research also accuses Freedom Holding Corp. of “fabricating revenue,” of manipulating its own stock price, and of commingling customer funds. “All told, Freedom Holding has exhibited a startling array of red flags relating to virtually every category of financial malfeasance worthy of investigation,” writes Hindenburg Research, which has entered a short position on the company’s stock.

The company’s shares closed Tuesday’s market down 3.2%, leaving it with a market capitalization of nearly $4.4 billion. Turlov owns over 70% of the stock, which means the company’s shares prices are less susceptible to general investor sentiment.

“The allegations in the Hindenburg report are without merit,” a company spokesperson told Forbes in an emailed statement. “Freedom Holding and its subsidiaries continue to provide all required disclosures to regulators and investors, who can review our recently filed form 10-K and and [sic] audited financial statements on our website.”

Freedom Holding Corp., as those who’ve followed it well know, has had its share of challenges in the past year. The company’s previous auditors, a small Utah-based firm called WSRP LLC, was sanctioned last December by the Public Company Accounting Oversight Board for failing to “inquire about the business purpose of…related party transactions.” Freedom also had to restate its 2022 earnings and three different quarterly reports (the fourth quarter of 2021, as well as Q2 and Q3 of last year). Nasdaq has been threatening to delist the company since June 15 this year.

When Forbes first reported on Freedom over two years ago, the company’s meteoric stock market gains had vaulted its founder and CEO Turlov, a Russian-born millennial fond of wearing black turtlenecks and speaking with the U.S. press, into the billionaire ranks. The company, which had previously traded over-the-counter in the U.S., listed on the Nasdaq in October 2019. As Turlov told Forbes in a two-hour interview from his home in Almaty, Kazakhstan: “I had become determined to become a public company that would be good enough to be traded on [U.S. exchanges.] Because that’s the top of this business.”

In recent weeks, former Freedom Finance employees and analysts have spoken to Forbes about their impressions of and experiences working at Freedom Finance. Some corroborated claims recently made by Hindenburg Research, while others have brought fresh revelations on the firm’s working culture and toxic environment.

“They came in like cowboys, wild cowboys,” a former Freedom executive working in Dubai told Forbes a few weeks ago. “They were primarily looking for black funds, dark funds, unreported funds, to siphon them off into stock markets like they’d previously done very successfully in Russia” added the individual, who asked to remain anonymous in order to speak openly. “Once you go into unreported funds, that could be anything, especially in a market like Dubai. It could be terrorist money, it could be criminal syndicate money. It’s all kind of mixed up.”

This same employee also says that Freedom stiffed him out of money he was owed. “They would say, ‘As soon as the license is in place, we'll be able to open our bank accounts in Dubai and you'll get what is owed by us,’” the employee recalls. “They paid me a total of about $5,000 in six months whereas they were supposed to give me about [that much] a month,” added the employee, whose employment contract Forbes reviewed. “They still owe me salary for like eight months.”

A second former Freedom Finance employee who worked in the company’s Cyprus office, which employs about 300 people, did not have any insight or knowledge of the company’s allegedly dubious financials or Know Your Customer (KYC) requirements, but had plenty to say about a toxic work environment.

“I was abused many times by my management and gasli[t] and it was very, very difficult for me to go on,” says the former employee, who worked in finance and says he received double the amount of work that his colleagues did, yet was belittled by his managers. “They wanted to prove to me that I'm the worst one; that I'm not worth working there,” recalls the employee, who left after six months. “It was a terrible experience.”

Other employees had a better time at the company. “I will tell you, it was one of the nicest places that I've worked,” says a former senior executive who worked in the Cyprus office. “The nicest people.” Did they sense that anything was off about the company? Absolutely not: “It was straightforward. I didn’t see anything strange,” the person added. “I'm quite a skeptical person, but no, everything was good. Everything was good.”

Perhaps, however, a grain of salt or two are warranted. Since leaving Freedom Finance, this individual (who asked that Forbes not use his name) has worked for the equity market investment arm of Alfa Bank, Russia’s largest private bank, which has been sanctioned by the EU and the US. Alfa Bank is cited extensively in Hindenburg’s report; Freedom “continues to publicly offer clients ways to circumvent sanctions through Alfa Bank,” Hindenburg says.

“We would never comment on employees or employment matters,” a spokesperson for Freedom Holding said.

Turlov got his start in finance nearly two decades ago. In 2003, at age 16, he applied to a Moscow trading firm as a part-time junior trader, before moving to another bank two years later with the goal of investing in U.S. markets, he told Forbes in 2021. When the great recession hit and Turlov lost his job, he and about a half dozen of his fellow traders started a new company that would become Freedom, Turlov told Forbes .

The group set up shop in Almaty, Kazakhstan, and from there, expanded the business to other Eastern European countries. Turlov’s entree to U.S. markets came in 2015, when the company completed a reverse merger with Bmb Munai, a Nevada-incorporated company that formerly owned Kazakh oil and gas assets. Bmb President Askar Tashtitov stayed on as Freedom’s president.

For Turlov, Freedom’s 2019 IPO was a dream come true. “Never in my first days of my career would [I have been] able to expect that we will become a stock trading a million shares in a day,” he told Forbes.

But being a public company has exposed Freedom Finance’s curious design to investors. One of its most head-scratching features: the Belize-based brokerage firm, FFIN Belize, a third-party entity that routes all U.S. stock trades by Freedom customers, and which is wholly owned by Timur Turlov himself. In 2021, Turlov explained away the offshore connection as stemming from a regulatory hangup in Kazakhstan. In reality, Hindenburg claims, citing former company executives, FFIN Belize has been used to “funnel money out of Russia, often in cash, with no regard for KYC and AML [anti-money laundering] protocols.”

Another curiosity of Freedom involves one of its chief selling points to international customers—the firm’s supposed access to hot U.S. IPO stocks. The secret, Freedom told Bloomberg and others, was an unidentified hedge fund that bought shares directly from stock IPO underwriters, and then passed along the stock to Freedom via its Belize affiliate to the firm’s customers.

But that hedge fund may not exist at all, Hindenburg reports, citing individuals from the company. Jay Ritter, a professor at the Warrington College of Business at the University of Florida, is also skeptical about the existence of this investment vehicle. “Allocations to hedge funds aren't being hidden. There aren't pre-IPO investments. It's all done transparently, it's above the table,” Ritter, who researches IPOs, told Forbes a few weeks ago. “I find it very fishy."

With additional reporting by Lisette Voytko.

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What is Hindenburg Research, firm accusing Adani of fraud?

Hindenburg research is a financial research firm with an explosive name and a track record of sending the stock prices of its targets tumbling, article bookmarked.

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Hindenburg Research, the financial research firm with an explosive name and a track record of sending the stock prices of its targets tumbling, is taking on one of the world’s richest men.

The Adani Group has blasted the accusations, calling them “a malicious combination of selective misinformation and stale, baseless and discredited allegations that have been tested and rejected by India’s highest courts.”

Nevertheless, Hindenburg’s scorching allegations have caused the fortune of Adani Group’s founder, Gautam Adani , to slide by more than $34 billion in just a week, according to the Bloomberg Billionaires index. Here’s a look at the firm behind all the movement:

WHAT IS IT?

WHERE DID ITS NAME COME FROM?

WHO ELSE HAS HINDENBURG GONE AFTER?

It's perhaps most famous for a 2020 report on Nikola, a company in the electric-vehicle industry whose founder Hindenburg said made misleading claims to ink partnerships with top auto companies hungry to catch up to Tesla .

WHAT HAS COME OF SUCH ACCUSATIONS?

For Nikola, quick scrutiny from the government and investors.

The Securities and Exchange Commission also soon issued subpoenas to Nikola’s directors.

And Nikola in late 2021 agreed to pay $125 million to settle SEC charges that it defrauded investors by misleading them about its products, technical advancements, and commercial prospects.

WHAT DOES HINDENBURG GET OUT OF THIS?

It can make money. In its Adani report, it said that it had taken a “short position in Adani Group Companies” through bonds that trade in the U.S. and other investments that trade outside India.

It has made similar “short” bets against other companies it published unflattering reports on. A “short” trade is a way for someone to make money if an investment's price falls. Afterward, if the price of a company's stock or bonds falls because of the negative attention from the report, Hindenburg can profit.

Such short sellers have been criticized for unfairly pushing down prices of stocks with potentially unfounded allegations. But proponents also call them a healthy part of a stock market, keeping stock prices in check and preventing them from running too high.

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Adani Faces Tough Battle in Potential Hindenburg Research Suit

By Matthew Bultman

Adani Group is eyeing litigation against Hindenburg Research as it tries to right itself after the New York short-selling firm’s fraud allegations cost it billions—but the Indian conglomerate’s US legal options are limited.

Adani’s losses topped $110 billion in recent weeks, as investors dumped shares after the Hindenburg report. Adani Group has called the report “bogus.”

Companies targeted by short reports often look to respond by suing the report issuers. Those that follow through with litigation don’t have a track record of winning. The cases are hard to prove because they often hinge on defamation claims, and the First Amendment ...

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Hindenburg Research Announces $1,000,000 Bounty For Details On Tether’s Backing

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NEW YORK, NY — Hindenburg Research, a forensic financial research firm, today announces it is launching the Hindenburg Tether Bounty Program (the “Program”) – a reward of up to $1,000,000 for information leading to previously undisclosed details about cryptocurrency “stablecoin” Tether’s backing.

Tether is a key underpinning of the multi-trillion-dollar crypto market. Yet despite its repeated claims of transparency, its disclosures around its holdings have been opaque. The company claims to hold a significant portion of its reserves in commercial paper yet has disclosed virtually nothing about its counterparties.

Hindenburg has doubts about the legitimacy of Tether’s backing due to the company’s sparse disclosures.

Tether has been referred to as a “stablecoin” in the crypto space due to the company’s historical claims that it was equivalent to $1 USD and was backed 1-to-1 by “traditional currency” reserves.

Since those claims that garnered it “stablecoin” status were made years ago, Tether subsequently revealed that its coin was backed only by a small percentage of traditional currency, and that much of its backing consists of holdings in commercial paper issued by unnamed counterparties.

Despite multiple regulatory sanctions over its alleged lack of truthful disclosure about its reserves, and despite Tether now having a $70 billion market cap, Tether still refuses to provide transparency to the public on its holdings.

Recent reporting has indicated that Tether’s claims would make it one of the largest holders of commercial paper in the world. But major trading desks stated to the press that they had never worked with them or seen them in the market.

Hindenburg’s program enables users to submit information on Tether’s backing to Hindenburg for a chance to earn rewards in an amount up to $1,000,000, the (“Bounty”).

Hindenburg Research founder Nathan Anderson said: “We feel strongly that Tether should fully and thoroughly disclose its holdings to the public. In the absence of that disclosure, we are offering a $1,000,000 bounty to anyone who can provide us exclusive detail on Tether’s supposed reserves.”

Securities and Exchange Commission Chair Gary Gensler said in September of this year that stablecoins were acting as “poker chips” at the crypto Wild West “casino gaming tables”.

Gensler said he feared that: “[the SEC will] keep bringing these enforcement cases but there’s gonna be a problem, on lending platforms, on trading platforms, and, frankly, when that happens…a lot of people are going to get hurt.”

Hindenburg Research seeks to help advance the public’s knowledge of what it believes is a growing threat to investors by encouraging disclosure related to a crucial part of the crypto markets, which are nearing “systemic” size.

The full terms and conditions of Hindenburg’s Tether bounty program can be found here and should be read closely by anyone considering submitting information to the program.

Disclosure: Hindenburg Research does not hold positions, either long or short, in Tether, bitcoin or any cryptocurrency at the time of this press release.

About Hindenburg Research

Hindenburg Research is a research firm that specializes in forensic financial research. The company’s experience in the investment management industry spans decades, with a historical focus on equity, credit, and derivatives analysis.

Hindenburg uses fundamental analysis to aid its investment decision-making and believes the most impactful research results from uncovering hard-to-find information from atypical sources. In particular, the company specializes in uncovering accounting irregularities, questionable management, undisclosed related party transactions and illegal/unethical business, financial reporting or disclosure practices.

[email protected]

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Column-adani group threatens, but hindenburg research rarely sued in u.s.

By Alison Frankel

(Reuters) - In the midst of a market rout last week that stripped Indian conglomerate Adani Group of $65 billion in market capitalization, Adani announced that it was contemplating “remedial and punitive action” against Hindenburg Research, the short seller whose scathing Jan. 24 report sparked the sell-off.

If Adani is talking about a lawsuit in the U.S., I’ll believe it when I see it.

Based on my search of federal district court and New York State Supreme Court records – and despite some tough talk from Hindenburg targets such as Nikola Inc — it appears that only two of the 20 or so companies that Hindenburg has attacked in research reports issued since 2017 have actually sued the short seller for defamation.

And both of those lawsuits — one by China-based real estate developer Yangtze River Port and Logistics Ltd; the other by Bollywood film producer Eros International Plc — were tossed in 2019.

It’s worth looking at the short-lived Yangtze River case to understand why Adani (and other Hindenburg targets) should think twice about suing Hindenburg in the U.S.

Hindenburg blasted Yangtze River in a 2018 report that described the NASDAQ-listed company as a “shell” and a “scheme” that served only to transfer money from U.S. investors to Yangtze’s chairman and controlling shareholder. Yangtze sued Hindenburg, founder Nathan Anderson and a sister company, ClaritySpring Inc, for defamation in New York State Supreme Court in Manhattan, where Hindenburg is based.

In 2019, Justice Peter Sherwood dismissed the suit, holding that Hindenburg’s allegedly defamatory statements were statements of opinion protected by the 1st Amendment. Hindenburg had offered a disclaimer about its short position in Yangtze shares at the beginning of its report, the judge noted. The short seller also repeatedly hedged its accusations with words like “we think” and “we believe,” Sherwood said, and noted throughout the report that its views were based on public documents that Hindenburg hyperlinked.

“Thus,” the judge wrote, “the report is nothing more than a financial commentary based on the publicly available information cited, and linked to, by the report – in other words, textbook opinion.”

Yangtze’s lawyer from Sichenzia Ross Ference did not respond to my query. Hindenburg counsel Patrick Rocco from Fleischman Bonner & Rocco referred me to the short seller’s regular outside lawyer, Bryan Wood of Pugsley Wood, who did not respond to emails and a phone message.

Most courts in the U.S. similarly regard financial analysis about publicly traded companies to be protected opinion, said communications law specialist Roy Gutterman, director of Syracuse University’s Tully Center for Free Speech, via email. “Courts look at the meaning of the [allegedly defamatory] statements, whether they can be proven true or false, and, most importantly, their context,” said Gutterman. “The context of financial analysis of companies, particularly, publicly traded companies, tends to be pure opinion,” he added.

The Eros case naming Hindenburg, Anderson and ClaritySpring is another example. Eros' lawsuit was more complicated than the Yangtze River case, but the outcome was the same. The company alleged that several short sellers, including ClaritySpring, had conspired to drive down its share price. Eros claimed that Hindenburg Research was actually created by the conspirators to serve as a persona to spread misinformation about the Indian film company.

New York State Supreme Court Justice Joel Cohen found that all of the short sellers’ assertions, in articles, reports and online posts, were protected opinion. “Many of the articles at issue here were posted on online forums that generally traffic in sharing financial opinions,” Cohen wrote. “A reasonable reader,” he said, “would understand that they were sharing opinions about Eros based on news about the company.”

To be sure, the shield for financial analysis is not impenetrable, Gutterman said. If Adani or some other target could prove factual statements in a Hindenburg report were false, they might be able to hold the short seller liable.

“But proving falsity of fact might be a difficult task in a case like this,” Gutterman said. “Threatening a libel case and winning a libel case are worlds apart.”

Hindenburg didn’t respond to my email query, but said in a statement last week that any action by Adani would be meritless and that it would welcome to opportunity to obtain discovery from the Indian company in U.S. litigation.

Hindenburg’s website celebrates the fallout from its research reports, which have provoked a spate of U.S. regulatory investigations and shareholder class actions. Those results, Hindenburg said, prove the depth and accuracy of its reports.

The short seller, in fact, is so confident about its research that last August, it filed its own defamation suit against a biopharmaceutical company that pushed back after a Hindenburg research report asserting that an inventor with close ties to the company was “a lifelong con artist.”

After the report came out, the company, Enochian Biosciences Inc, issued a shareholder letter claiming that Hindenburg had misrepresented some of its communications with company officials about a Turkish criminal proceeding against the inventor.

Hindenburg sued, alleging that Enochian's factual false accusations, which were also filed with the U.S. Securities and Exchange Commission, had wrongly besmirched Hindenburg’s “well-deserved reputation for thoroughness, precision and accuracy.”

The tactic worked: Several weeks after the short seller brought its complaint in federal court in Manhattan, Enochian revised the SEC-filed shareholder letter to remove criticism of Hindenburg, which then dropped the suit. (Enochian counsel Clayton Parker of K&L Gates declined to comment on the case.)

Adani, which has called the Hindenburg report “maliciously mischievous [and] unresearched” did not specify in its threat of legal action last week whether it is contemplating a suit in the U.S. or in India.

But based on Hindenburg's litigation on the U.S., I'd say India is probably a better bet.

Adani firms lose $65 billion in value as U.S. short-seller battle escalates

Hindenburg says if Adani Group files lawsuit it will demand company documents

DraftKings investors can't rely on short-seller report to prove fraud - N.Y. judge

Get 7 Days Free

SHAREHOLDER ALERT: Pomerantz Law Firm Announces the Filing of a Class Action Against Equinix, Inc. – EQIX

NEW YORK, June 30, 2024 (GLOBE NEWSWIRE) -- Pomerantz LLP announces that a class action lawsuit has been filed against Equinix, Inc. (“Equinix” or the “Company”) (NASDAQ: EQIX). Such investors are advised to contact Danielle Peyton at [email protected] or 646-581-9980, (or 888.4-POMLAW), toll-free, Ext. 7980. Those who inquire by e-mail are encouraged to include their mailing address, telephone number, and the number of shares purchased.

The class action concerns whether Equinix and certain of its officers and/or directors have engaged in securities fraud or other unlawful business practices.

You have until July 1, 2024 , to ask the Court to appoint you as Lead Plaintiff for the class if you are a shareholder who purchased or otherwise acquired Equinix securities during the Class Period. A copy of the Complaint can be obtained a t www.pomerantzlaw.com .

[Click here for information about joining the class action]

On March 20, 2024, Hindenburg Research published a short report alleging that Equinix’s senior management was manipulating key financial metrics to boost the appearance of profitability and trigger executive stock grants (the “Hindenburg Report”).

Following publication of the Hindenburg Report, Equinix’s stock price fell $19.70 per share, or 2.33%, to close at $824.88 per share on March 20, 2024.

Then, on March 25, 2024, Equinix disclosed that the Audit Committee of the Company’s Board of Directors had commenced an independent investigation to review the matters referenced in the Hindenburg Report and that following publication of the Hindenburg Report, the Company received a subpoena from the U.S. Attorney’s Office for the Northern District of California.

On this news, Equinix’s stock price fell $8.45 per share, or 1.05%, to close at $792.52 per share on March 25, 2024.

Pomerantz LLP, with offices in New York, Chicago, Los Angeles, London, Paris, and Tel Aviv, is acknowledged as one of the premier firms in the areas of corporate, securities, and antitrust class litigation. Founded by the late Abraham L. Pomerantz, known as the dean of the class action bar, Pomerantz pioneered the field of securities class actions. Today, more than 85 years later, Pomerantz continues in the tradition he established, fighting for the rights of the victims of securities fraud, breaches of fiduciary duty, and corporate misconduct. The Firm has recovered billions of dollars in damages awards on behalf of class members. See www.pomlaw.com .

Attorney advertising. Prior results do not guarantee similar outcomes.

CONTACT: Danielle Peyton Pomerantz LLP [email protected] 646-581-9980 ext. 7980

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The New York Post Nailed Biden's Cognitive Problem: And Was Ignored

Back there in the Stone Age of February, 2024, the New York Post headlined:

Jill Biden and Dems committed elder abuse on Joe — now they must force him to step aside

Among other things the Post Editorial Board wrote:

As part of special counsel Robert Hur’s investigation into Joe Biden, he reviewed interviews conducted by a ghostwriter with Biden after he left office. The former vice president was “painfully slow,” Hur’s report notes, with ” limited precision and recall.” This is in 2017 — three full years before he ran for president. What Hur has proven is that Joe Biden’s cognitive decline is not new, and it certainly wasn’t a secret. Jill Biden knew. His aides knew. Heck, James Clyburn, the entire Democratic establishment knew.

Indeed they all did know. And so too did the mainstream media. And they said - and did - nothing.

Now, almost a full seven years from 2017, the CNN Biden-Trump debate has suddenly resulted in a horrified media not only admitting there’s a problem. Now they have abruptly joined with their Democrat allies in calling for Biden to be removed from the Democrat ticket.

The Wall Street Journal began to put a crack in this wall of silence with this recent pre-debate story headed:

Behind Closed Doors, Biden Shows Signs of Slipping Participants in meetings said the 81-year-old president performed poorly at times. The White House said Biden is sharp and his critics are playing partisan politics.

Now, post-debate, here’s the headline from USA Today :

'Sense of shock': Democrats melt down over Joe Biden's debate disaster

This jewel included these lines:

WASHINGTON − Democrats and other opponents of Donald Trump melted down as President Joe Biden struggled during Thursday' s debate, with some suggesting he should bow out to allow another Democrat to run instead. Biden's voice was hoarse and raspy from the start. He stumbled over words and had to correct himself with numbers. He was sometimes hard to follow. On one occasion , the president appeared to lose his train of thought, stopped speaking and concluded − confusingly − with the line, "we finally beat Medicare.

CNN headlined:

Biden’s debate performance sets off alarm bells for Democrats

Reported the liberal network:

Washington CNN — President Joe Biden’s debate performance has set off alarm bells among top Democrats, leaving some to openly question whether Biden can stay atop of the Democratic ticket. “He seemed a little disoriented. He did get stronger as the debate went on. But by that time, I think the panic had set in,” longtime Democratic operative and CNN senior political commentator David Axelrod said. Axelrod also gave voice to a conversation happening among many Democrats on Thursday night: “There are going to be discussions about whether he should continue.

Over at the Business Insider , the collection of media terrified about Biden’s performance was headed:

'He must bow out': the media reacts to Biden's historically bad debate performance

The story reported:

President Joe Biden's historically bad debate performance on Thursday night was received so poorly that there's serious talk among America's commentariat that he could, or should, or needs to be replaced. US media outlets were blunt in their assessment, featuring Biden's fumbling performance prominently in front-page headlines and scathing opinion pieces.

The Insider then runs a list of media outraged at Biden’s performance and his presence on the ticket.

The New York Times The New York Post The Washington Post Fox News CNN The Wall Street Journal The Financial Times

Next the list shifted to mention the negative reviews of three individual commentators: Nate Silver of the New York Times , podcaster Joe Klein, and blogger Noah Smith.

Again, to remind, all of this is a full seven years after the Post noted that in 2017 “Joe Biden’s cognitive decline is not new, and it certainly wasn’t a secret.”

To sum up, the knowledge of Biden’s cognitive decline was available to the media. As The Post noted:

…Joe Biden’s cognitive decline is not new, and it certainly wasn’t a secret. Jill Biden knew. His aides knew. Heck, James Clyburn, the entire Democratic establishment knew.

Indeed they all did know. And so too did the mainstream media. And they said - and did - nothing. Out there by himself was Fox’s Sean Hannity, who began to routinely note Biden’s cognitive struggles.

Now, of a sudden, as the result of a presidential debate in which Biden went off the tracks and illustrated in alarmingly vivid fashion that he is indeed seriously cognitively impaired - the mainstream media and their Democrat allies are demanding that Biden be replaced on the Democratic ticket.

Why? For no other reason than that now that the American voting public has seen the Biden cognitive problem at length in living color they quite possibly will unite behind - Donald Trump.

And the media simply can’t have that.

Which is another way of saying that when it came to Biden’s condition, the New York Post was on to it.

And said so, even when there was a veritable platoon of people in the media and the Democrat Establishment who simply zipped their journalistic lips.

Imagine that.

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Scientist behind Alzheimer’s drug in late-stage trials is indicted on charges of research fraud

The Summary

A neuroscientist whose work helped pave the way for an Alzheimer’s drug candidate was indicted on charges of fraud.
The charges are related to the alleged fabrication of research images and data that the scientist may have used to secure grants.
The manipulation of research images is a growing concern in the scientific community.

A neuroscientist whose work helped pave the way for an Alzheimer’s drug candidate was indicted by a federal grand jury on Thursday on charges of fraud.

The indictment, announced Friday by the Justice Department , brings additional scrutiny to the work of Hoau-Yan Wang , who has had multiple studies retracted and faced an investigation by the City University of New York, his employer, that was later halted .

The charges in the indictment are related to the alleged fabrication of research images and data that Wang may have used to secure federal grants from the National Institutes of Health.

Wang, a medical professor at the City University of New York , collaborated with Cassava Sciences, a pharmaceutical company based in Austin, Texas, as it investigated an Alzheimer’s drug candidate called simufilam. He was awarded some $16 million in grants for early-stage drug development in collaboration with Cassava, according to the indictment.

The indictment charges Wang with one count of fraud against the United States, two counts of wire fraud and one count of false statements. It accuses Wang of manipulating or adding to images of Western blots, a laboratory method that researchers use to identify proteins, in order to bolster evidence and help secure grants.

The indictment also suggests that Wang may have lied to scientific journals to substantiate his research, which contributed to the early development of simufilam.

The drug is currently in a late-stage clinical trial, and some 735 patients had participated as of May 2024, according to a news release from Cassava last month.

Wang did not immediately respond to a request for comment. In 2023, he told The Wall Street Journal that a CUNY investigation made “no conclusive findings of data manipulation, consistent with what I’ve been saying for two years.”

Cassava said in a release on Friday that Wang had not participated in its most recent trial.

In a news release, the company said: “Wang’s work under these grants was related to the early development phases of the Company’s drug candidate and diagnostic test and how these were intended to work.”

Cassava added that Wang “had no involvement in the Company’s Phase 3 clinical trials of simufilam.”

A Cassava spokesperson also pointed to a news release the company issued September 2023, which said academic researchers outside of CUNY had found evidence that the drug could affect signaling pathways with suspected involvement in Alzheimer’s.

CUNY learned of the indictment on Friday, a spokesperson said in an email, adding: “The University has and will continue to cooperate to the fullest degree with the federal government’s investigation until the matter is resolved.”

The indictment doesn’t specifically name the university, drug or company, listing them instead as “University 1,” “Drug A” and “Company 1,” respectively.

Still, Cassava’s shares fell nearly 35% on Friday in a rapid plunge that triggered multiple trading halts.

Overall, the manipulation of research images and the handling of allegations of research misconduct is a growing concern in the scientific community.

The issue gained particular attention last summer, when then-Stanford President Marc Tessier-Lavigne stepped down from his post after allegations arose that images had been manipulated within his lab. Tessier-Lavigne said he never submitted papers he didn’t think were accurate and noted that a panel investigating his work did not find that he knew of misconduct within his lab.

Then in January, an amateur science sleuth made allegations of research image manipulation by top scientists at the Dana-Farber Cancer Institute , which led to subsequent retractions. Dana-Farber said it took decisive action to correct the scientific record.

Wang’s work has faced questioning for some time, as the journal Science has reported . The journal obtained a report by CUNY that found evidence suggesting research misconduct. The university halted its investigation after Science published the report .

Multiple journal articles on which Wang was an author have been retracted , according to the website Retraction Watch.

Evan Bush is a science reporter for NBC News. He can be reached at [email protected].

Research into trans medicine has been manipulated

Court documents offer a window into how this happens

A pile of pill boxes are stacked on top of each other precariously as a hand tries to take one of the boxes.

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I N APRIL HILARY CASS , a British paediatrician, published her review of gender-identity services for children and young people, commissioned by NHS England. It cast doubt on the evidence base for youth gender medicine. This prompted the World Professional Association for Transgender Health ( WPATH ), the leading professional organisation for the doctors and practitioners who provide services to trans people, to release a blistering rejoinder. WPATH said that its own guidelines were sturdier, in part because they were “based on far more systematic reviews”.

Systematic reviews should evaluate the evidence for a given medical question in a careful, rigorous manner. Such efforts are particularly important at the moment, given the feverish state of the American debate on youth gender medicine, which is soon to culminate in a Supreme Court case challenging a ban in Tennessee. The case turns, in part, on questions of evidence and expert authority.

Court documents recently released as part of the discovery process in a case involving youth gender medicine in Alabama reveal that WPATH ’s claim was built on shaky foundations. The documents show that the organisation’s leaders interfered with the production of systematic reviews that it had commissioned from the Johns Hopkins University Evidence-Based Practice Centre ( EPC ) in 2018.

From early on in the contract negotiations, WPATH expressed a desire to control the results of the Hopkins team’s work. In December 2017, for example, Donna Kelly, an executive director at WPATH , told Karen Robinson, the EPC ’s director, that the WPATH board felt the EPC researchers “cannot publish their findings independently”. A couple of weeks later, Ms Kelly emphasised that, “the [ WPATH ] board wants it to be clear that the data cannot be used without WPATH approval”.

Ms Robinson saw this as an attempt to exert undue influence over what was supposed to be an independent process. John Ioannidis of Stanford University, who co-authored guidelines for systematic reviews, says that if sponsors interfere or are allowed to veto results, this can lead to either biased summaries or suppression of unfavourable evidence. Ms Robinson sought to avoid such an outcome. “In general, my understanding is that the university will not sign off on a contract that allows a sponsor to stop an academic publication,” she wrote to Ms Kelly.

Months later, with the issue still apparently unresolved, Ms Robinson adopted a sterner tone. She noted in an email in March 2018 that, “Hopkins as an academic institution, and I as a faculty member therein, will not sign something that limits academic freedom in this manner,” nor “language that goes against current standards in systematic reviews and in guideline development”.

Not to reason XY

Eventually WPATH relented, and in May 2018 Ms Robinson signed a contract granting WPATH power to review and offer feedback on her team’s work, but not to meddle in any substantive way. After wpath leaders saw two manuscripts submitted for review in July 2020, however, the parties’ disagreements flared up again. In August the WPATH executive committee wrote to Ms Robinson that WPATH had “many concerns” about these papers, and that it was implementing a new policy in which WPATH would have authority to influence the EPC team’s output—including the power to nip papers in the bud on the basis of their conclusions.

Ms Robinson protested that the new policy did not reflect the contract she had signed and violated basic principles of unfettered scientific inquiry she had emphasised repeatedly in her dealings with WPATH . The Hopkins team published only one paper after WPATH implemented its new policy: a 2021 meta-analysis on the effects of hormone therapy on transgender people. Among the recently released court documents is a WPATH checklist confirming that an individual from WPATH was involved “in the design, drafting of the article and final approval of [that] article”. (The article itself explicitly claims the opposite.) Now, more than six years after signing the agreement, the EPC team does not appear to have published anything else, despite having provided WPATH with the material for six systematic reviews, according to the documents.

No one at WPATH or Johns Hopkins has responded to multiple inquiries, so there are still gaps in this timeline. But an email in October 2020 from WPATH figures, including its incoming president at the time, Walter Bouman, to the working group on guidelines, made clear what sort of science WPATH did (and did not) want published. Research must be “thoroughly scrutinised and reviewed to ensure that publication does not negatively affect the provision of transgender health care in the broadest sense,” it stated. Mr Bouman and one other coauthor of that email have been named to a World Health Organisation advisory board tasked with developing best practices for transgender medicine.

Another document recently unsealed shows that Rachel Levine, a transwoman who is assistant secretary for health, succeeded in pressing wpath to remove minimum ages for the treatment of children from its 2022 standards of care. Dr Levine’s office has not commented. Questions remain unanswered, but none of this helps WPATH ’s claim to be an organisation that bases its recommendations on science. ■

Stay on top of American politics with The US in brief , our daily newsletter with fast analysis of the most important electoral stories, and Checks and Balance , a weekly note from our Lexington columnist that examines the state of American democracy and the issues that matter to voters.

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This article appeared in the United States section of the print edition under the headline “Marking their own homework”

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How Do Our Memories Last a Lifetime? New Study Offers a Biological Explanation

Whether it’s a first-time visit to a zoo or when we learned to ride a bicycle, we have memories from our childhoods kept well into adult years. But what explains how these memories last nearly an entire lifetime?

A new study in the journal Science Advances , conducted by a team of international researchers, has uncovered a biological explanation for long-term memories. It centers on the discovery of the role of a molecule, KIBRA, that serves as a “glue” to other molecules, thereby solidifying memory formation.

“Previous efforts to understand how molecules store long-term memory focused on the individual actions of single molecules,” explains André Fenton, a professor of neural science at New York University and one of the study’s principal investigators. “Our study shows how they work together to ensure perpetual memory storage.”

“A firmer understanding of how we keep our memories will help guide efforts to illuminate and address memory-related afflictions in the future,” adds Todd Sacktor, a professor at SUNY Downstate Health Sciences University and one of the study’s principal investigators.

Discovery of a "glue" molecule's purpose affirms a concept introduced Nobel Laureate Francis Crick to explain the brain’s role in memory storage.

It’s been long-established that neurons store information in memory as the pattern of strong synapses and weak synapses, which determines the connectivity and function of neural networks. However, the molecules in synapses are unstable, continually moving around in the neurons, and wearing out and being replaced in hours to days, thereby raising the question: How, then, can memories be stable for years to decades?

In a study using laboratory mice, the scientists focused on the role of KIBRA, or kidney and brain expressed protein, the human genetic variants of which are associated with both good and poor memory. They focused on KIBRA’s interactions with other molecules crucial to memory formation—in this case, protein kinase Mzeta (PKMzeta). This enzyme is the most crucial molecule for strengthening normal mammalian synapses that is known, but it degrades after a few days.

Their experiments reveal that KIBRA is the “missing link” in long-term memories, serving as a “persistent synaptic tag,” or glue, that sticks to strong synapses and to PKMzeta while also avoiding weak synapses.

“During memory formation the synapses involved in the formation are activated—and KIBRA is selectively positioned in these synapses,” explains Sacktor, a professor of physiology, pharmacology, anesthesiology, and neurology at SUNY Downstate. “PKMzeta then attaches to the KIBRA-synaptic-tag and keeps those synapses strong. This allows the synapses to stick to newly made KIBRA, attracting more newly made PKMzeta.”

More specifically, their experiments in the Science Advances paper show that breaking the KIBRA-PKMzeta bond erases old memory. Previous work had shown that randomly increasing PKMzeta in the brain enhances weak or faded memories, which was mysterious because it should have done the opposite by acting at random locations, but the persistent synaptic tagging by KIBRA explains why the additional PKMzeta was memory enhancing, by only acting at the KIBRA tagged sites.

Memories are stored by the interaction of two proteins: a structural protein, KIBRA (green), that acts as a persistent synaptic tag, and a synapse-strengthening enzyme, protein kinase Mzeta (red). Drugs that disrupt the memory-perpetuating interaction (other colors) erase pre-established long-term and remote memories. Credit: Changchi Hsieh, Ph.D.

“The persistent synaptic tagging mechanism for the first time explains these results that are clinically relevant to neurological and psychiatric disorders of memory,” observes Fenton, who is also on the faculty at NYU Langone Medical Center’s Neuroscience Institute.

The paper’s authors note that the research affirms a concept introduced in 1984 by Francis Crick. Sacktor and Fenton point out that his proposed hypothesis to explain the brain’s role in memory storage despite constant cellular and molecular changes is a Theseus’s Ship mechanism—borrowed from a philosophical argument stemming from Greek mythology in which new planks replace old ones to maintain Theseus’s Ship for years.

“The persistent synaptic tagging mechanism we found is analogous to how new planks replace old planks to maintain Theseus’s Ship for generations, and allows memories to last for years even as the proteins maintaining the memory are replaced,” says Sacktor. “Francis Crick intuited this Theseus’s Ship mechanism, even predicting the role for a protein kinase. But it took 40 years to discover that the components are KIBRA and PKMzeta and to work out the mechanism of their interaction.”

The study also included researchers from Canada’s McGill University, Germany’s University Hospital of Münster, and University of Texas Medical School at Houston.

This work was supported by grants from the National Institutes of Health (R37 MH057068, R01 MH115304, R01 NS105472, R01 MH132204, R01 NS108190), the Natural Sciences and Engineering Research Council of Canada Discovery (203523), and the Garry and Sarah S. Sklar Fund.

About New York University Founded in 1831, NYU is one of the world’s foremost research universities (with more than $1 billion per year in research expenditures, it is ranked seventh among private research universities) and is a member of the selective Association of American Universities. NYU has degree-granting university campuses in New York, Abu Dhabi, and Shanghai; has 13 other global academic sites, including London, Paris, Florence, Tel Aviv, Buenos Aires, and Accra, and US sites in Washington, DC, Los Angeles, CA, and Tulsa, OK; and both sends more students to study abroad and educates more international students than any other U.S. college or university. Through its numerous schools and colleges, NYU is a leader in conducting research and providing education in the arts and sciences, law, medicine, business, dentistry, engineering, education, nursing, the cinematic and performing arts, music and studio arts, public service, social work, public health, and professional studies, among other areas.

About SUNY Downstate Health Sciences University Downstate Health Sciences University in Brooklyn is one of four academic health centers (AMCs) in the 64-campus State University of New York (SUNY) system and the only SUNY AMC in New York City dedicated to health education, research, and patient care for the borough’s 2.7 million residents. Its flagship hospital, University Hospital at Downstate (UHD), is a teaching hospital that benefits from the expertise of Downstate’s exceptional medical school and world-class research facilities. Beyond its clinical excellence, Downstate houses a range of esteemed educational institutions, including the College of Medicine, College of Nursing, School of Health Professions, School of Graduate Studies, and School of Public Health. Downstate fosters innovation through its multifaceted biotechnology initiatives, including the Biotechnology Incubator and BioBAT, which support both early-stage and more mature biotech companies. Downstate’s research enterprise drives innovation and discovery across a wide array of disciplines. Our investigators are making discoveries that are changing the world and pushing the boundaries of what is possible in biomedicine and healthcare.

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New ‘Detective Work’ on Butterfly Declines Reveals a Prime Suspect

Agricultural insecticides were a key factor, according to a study focused on the Midwest, though researchers emphasized the importance of climate change and habitat loss.

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Four monarch butterflies on a plant. They have black bodies and orange wings with strips of black and flecks of white around the outer edges.

By Catrin Einhorn

What’s driving ominous declines in insects?

While a growing body of research shows decreases in many insect populations, it has been hard for scientists to disentangle the possible causes. Are insects suffering from habitat loss as natural areas are plowed and paved? Is climate change doing them in? What about pesticides?

The latest insight comes from a study on butterflies in the Midwest, published on Thursday in the journal PLOS ONE . Its results don’t discount the serious effects of climate change and habitat loss on butterflies and other insects, but they indicate that agricultural insecticides exerted the biggest impact on the size and diversity of butterfly populations in the Midwest during the study period, 1998 to 2014.

Especially detrimental, the researchers found, was a class of widely used insecticides called neonicotinoids that are absorbed into the tissues of plants.

“It’s a story about unintended consequences,” said Scott Swinton, a professor of agricultural economics at Michigan State University and one of the study’s authors. “In developing technologies that were very effective at controlling soybean aphid and certain other agricultural pests, non-target species that we care about, butterflies in particular, have been harmed.”

Europe largely banned neonicotinoids in 2018, citing risks to bees. The new findings come as wildlife officials in the United States weigh whether to place monarch butterflies, which range coast to coast, on the endangered species list. (They have already found such protections to be warranted but said they were precluded by higher-priority needs.)

In addition to delighting humans and pollinating plants, butterfly species are a critical food source for other animals, notably birds, during their life stage as caterpillars. In fact, research has linked some bird declines to insect declines.

Are Butterflies Wildlife? Depends Where You Live.

A legal quirk leaves officials in at least a dozen states with little or no authority to protect insects. That’s a growing problem for humans.

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