Hedge funds

Anson Advisors SEC first skirmish

Anson Advisors gets a slap on the wrist from the SEC. It's consensual.
OPM 2 min read

Anson's founder Moez Kassam is an emerging philanthropist and you can now add the Treasury of a country in dire financial straits to his growing list of causes. This particular "donation" was facilitated via the American SEC, as part of a $3.3m settlement over Anson having tripped over some capital markets regulation.

Rightly or wrongly, there have been rumours for years that Anson engages in illegal trading practices especially in relation to its short selling activities. Anson has fought back by bringing a defamation lawsuit against its most notorious detractor, one Robert Doxtator. The firm was also reported to be under SEC scrutiny as part of an industry-wide investigation into short-selling following the GameStop debacle. Nothing substantive has come out of any of that. And the settlement announced today doesn't change much, it's rather technical. Anson apparently violated Rule 105 of Regulation M under the Securities Exchange Act of 1934.

In essence, the rule forbids a market participant from purchasing stock in a public offering if that person previously sold short the security during a defined restricted period (typically, 5 days). The rule applies regardless of the trader's intent and is in place to prevent manipulative short sales before the pricing of covered share offerings. This rule is subject to certain exceptions. Anson tried to avail itself of such an exception, but did so with an "incorrect understanding" as to the timing of how it worked.

As a result, Anson has agreed to disgorge about $2.7m in profits and interest in addition to paying $600k in civil money penalty. All for transfer to the general fund of the US Treasury. Importantly, while the profits were made by funds managed by Anson, the settlement is borne by the manager. I don't know if there's a mechanism in the fund documents to charge back the disgorgment to the funds. The security in question was American Airlines.

You can make up your own judgement with the full explanations of the SEC here:


But in my capacity as Bay Street Chief Kompromat Officer, I consider this hardly qualifies as newsworthy, except for the fact that Anson arouses so much interest on the street. On the one hand, skeptics would say that there's never only one cockroach. On the other hand, it seems to me that if the SEC had lots of ammo, they would wait to build a broader case and not settle with a dubious party.

If you need basic background about why Anson is widely followed firm on Bay Street, you can read some of my previous coverage:



More from OPM WIRE

You can still sign up for free!

We still offer a free subscription tier (aka Blind Squirrels).

Great! You’ve successfully signed up.

Welcome back! You've successfully signed in.

You've successfully subscribed to OPM WIRE.

Success! Check your email for magic link to sign-in.

Success! Your billing info has been updated.

Your billing was not updated.