Last June, a relatively obscure short seller shook the financial world by settling a defamation lawsuit regarding his 2018 short of Farmland Partners, a real estate investment trust. Such settlements are rare, but in this case, Quinton Mathews, a Dallas-based researcher writing under the pseudonym Rota Fortunae, admitted making false statements about Farmland in a Seeking Alpha blogpost and profiting from short-dated put options ahead of its publication.
Mathews’ admissions, made in a federal court case for what has been billed as a “short and distort” scheme, appear to have put him in the crosshairs of the Department of Justice. Before he settled the lawsuit, Mathews was personally questioned by Justin Weitz, the acting principal assistant chief of the DOJ’s criminal division’s fraud section in Washington, D.C., according to an individual with knowledge of the situation.
Weitz is the top prosecutor in a wide-ranging probe of short sellers, according to that individual. While the probe’s existence is well known, Weitz’s role has not previously been reported.
Activist short sellers who’ve received subpoenas and warrants for trading records, phones, computers, emails, and other materials have told Institutional Investor that they don’t know what the feds are after. But the Farmland saga connects some of the dots.
Two short sellers Mathews worked with on a short of Banc of California — Muddy Waters’ Carson Block and pseudonymous short seller Marcus Aurelius Value — were...
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