Steps For Cos. Reacting To Anonymous Short-Seller Claims

By Rick Gallagher, Greg Demers, Annie Hancock and Matthew Carrieri (March 6, 2020, 2:46 PM EST) -- Short-seller campaigns have become increasingly common, touching almost every sector of the economy in the last five years. For most companies, the question is not if but when they will face such a campaign.

Regardless of the veracity of the allegations advanced, companies should not dismiss allegations outright simply by virtue of the fact that they are made by pseudonymous short sellers, because the market may not, and regulators certainly will not. Indeed, regulators now routinely investigate allegations raised in pseudonymous short reports, and expect public companies to have taken internal steps to investigate and remediate when necessary.  

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