- Pershing Square could be under an SEC investigation for alleged stock manipulation.
- The investigation may stem from the hedge fund's short thesis in Herbalife Ltd. HLF
- Tim Ramey of Pivotal Research believes an SEC investigation began at some point between July 7 and September 15
Bronte Capital, an Australian-licensed and USA-registered fund manager,posted on its blog a response from the Securities and Exchange Commission to a Freedom of Information Act (FOIA) requesting any documents pertaining to "investigative market manipulation in Herbalife stock by or on behalf of Pershing Square." The SEC refused to respond to the request and stated that it the agency can withhold records if it is "compiled for law enforcement purposes." However, the letter does go on to note that by withholding documents, Pershing Square, or any related parties, is not necessarily being investigated for any violations. The SEC's statement made it clear: "The assertion of this exemption should not be construed as an indication by the Commission or its staff that any violations of law have occurred with respect to any person, entity, or security." In an e-mail to clients on Thursday, Tim Ramey of Pivotal Research Group pointed out that he has also contacted the SEC with a FOIA request for "investigative record concerning Pershing Square Capital Management, LP" for the period of July 7, 2014 thru July 7, 2015. The SEC responded to Ramey's request on July 7 and stated: "Based on the information you provided in your letter, we conducted a thorough search of the SEC's various systems of records, but did not locate or identify any information responsive to your request." Ramey further pointed out in his e-mail to clients that the exemptions made to Bronte Capital was not made to his identical request. "Based on that fact pattern, we conclude that an SEC investigation into market manipulation in Herbalife stock by or on behalf of Pershing Square has been initiated at some date before September 15th but after July 7th," Ramey concluded in his e-mail.
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