- Hindenburg Research—the short seller whose investigations spawned fraud charges against 65 people, criminal indictments against 24 individuals, and foreign sanctions and fraud charges against 7 others—is disbanding.
One of Wall Street’s most feared short sellers, Hindenburg Research is winding down its operations after years of investigating accounting irregularities, undisclosed deals and conflicts of interest, and illegal and unethical business conduct. All told, Hindenburg’s published reports partly led to regulators accusing nearly 100 people of civil or criminal allegations.
Nate Anderson, who founded the forensic financial research firm six years ago, wrote a note on Wednesday explaining that the time had come to hang up the shingle. According to Anderson, he was at the point where he would wake up in the middle of the night thinking about work or the general pressure of everything. He described the labor at Hindenburg as “rather intense, and at times, all-encompassing.”
Yet, there is no one overarching reason to shut it down, Anderson noted. Mostly, it will be a relief, he said.
“There is not one specific thing—no particular threat, no health issue, and no big personal issue,” Anderson wrote. “The intensity and focus has come at the cost of missing a lot of the rest of the world and the people I care about. I now view Hindenburg as a chapter in my life, not a central thing that defines me.”
For the business world, Hindenburg’s exit eliminates a major player that had mainstream clout, credibility with investors and regulators, and the ability to deliver the goods. As a short seller, the firm would take short positions in the companies Hindenburg investigated, and the firm profited when stock prices took a hit following the release of its reports. While it had a financial interest in the stocks shorted, Hindenburg also tended to spend months conducting detailed investigations, ultimately publishing extensive analyses that included interviews with employees and on-the-ground research in excruciating detail.
Based on Hindenburg’s disclosed track record, at least seven CEOs, chairmen, or founders were arrested, resigned, or investigated as a result of its research. That includes Lordstown CEO Stephen Scott Burns who resigned and was later charged, and Nikola chairman Trevor Milton who resigned and was later sentenced to four years in prison for securities fraud. At least half a dozen chief financial officers were affected, including two resignations and a termination for cause, along with at least five board members, including one from Loop Industries who was charged with securities fraud.
“This should be a huge relief for Corporate America,” said Sidley Austin partner and co-chair in shareholder activism and corporate defense practice Kai Liekefett. “However, there are more than a dozen other short sellers in the U.S. and there will be new ones, and companies should expect those to step into Hindenburg’s shoes.”
Outside executive offices around the globe, however, Hindenburg's exit is less of a relief.
Gary Latham, Secretary of State Professor of Organizational Effectiveness at the University of Toronto Rotman School of Management, noted that while he isn't an expert, he believes as a citizen that this is "a loss for society."
Bryan Wood, a founder at law firm Pugsley Wood who represents whistleblowers, said he was in awe of Anderson for enduring the pressures of his success for as long as he did.
"Nate succeeded through a rare combination of intelligence, intuition, diligence, and sheer will," Wood told Fortune. "I have been privileged to stand with Nate fighting against corporate fraud, and as his friend, I can’t wait to see what he chooses to make of his next adventure."
And while Anderson wrote that he’s ready to spend time with the family and friends he has ignored—and his very “patient” wife, the remainder of the Hindenburg team will be unleashed. Anderson described them as “smart, focused, and fun to work with” and as having “little to no ego.” Yet, “they are ruthless assassins, capable of world-class work."
“Like me, our team didn’t come from traditional finance backgrounds. My first hire often describes himself as a former bartender,” Anderson wrote. “We have all worked extremely hard, with a focus on precision and letting the evidence dictate our words.”
