BOSTON, June 21 (Reuters) – A small Texas investor who slashed shares of a real estate investment company by 39% in one day agreed to pay the company restitution to settle a lawsuit against him, a rare development which could embolden other companies to pursue such claims.
Quinton Mathews, who published his business research online under the pseudonym Rota Fortunae, will pay Farmland Partners Inc (FPI.N) “a multiple” of his short bet profits in 2018, under the terms of the law settlement announced late Sunday. His research has erased up to $ 115 million from Farmland’s market value.
Parties declined requests for comment on the exact value of the settlement.
Mathews conceded that “many key statements” in a report he posted on the Seeking Alpha website targeting Farmland – including allegations of questionable related party transactions and the risk of insolvency – were false.
âI regret any damage caused by the article and its inaccuracies,â said Mathews in the ad, which was posted on Twitter and Seeking Alpha.
Paul Pittman, CEO of Farmland, said in a statement that “investors already recognize that the company has been the victim of a short and distorting ploy.”
Farmland shares traded around $ 12.50 Monday afternoon, compared to around $ 5 after the short campaign. The company has produced total returns of 12.5% ââover the past three years, about 10 percentage points lower than the specialist REIT sector, according to a Morningstar tracker.
Jacob Frenkel, an attorney for Dickinson Wright who has defended companies against allegations of stock manipulation and was not involved in the Farmland case, said the apology and payment from Mathews could boost the confidence of the company to pursue similar claims against short sellers.
âIt is very unusual and refreshing to see a company engage in this fight, as most will take the short-term blow of the attack without pursuing legal justification,â Frenkel said.
George Moriarty, the former editor-in-chief of Seeking Alpha, told Reuters in 2019 that the courts have respected the website’s status as a neutral platform and that its staff are reviewing all posts (read more).
After the retraction, Seeking Alpha removed all posts from Mathews on Monday, including the original post on Farmland, and blocked his account, according to website rep Abby Estikangi-Carmel.
Seeking Alpha’s policies include certifying the author that they were not paid to publish and, for short reports, that the assertion was handled by the target company.
âWhatever action you take, a bad actor can decide to defraud us by violating our policies, as has obviously happened here,â Estikangi-Carmel said. “Fortunately, this appears to be an isolated incident.”
Mathews runs a one-person forensic research firm, QKM LLC, based in Dallas, and has published over a dozen articles on Seeking Alpha.
Farmland’s litigation against a hedge fund company that paid Mathews for the research, Sabrepoint Capital Management LP, continues. Sabrepoint founder George Baxter said his company had nothing to do with the Seeking Alpha article and that it “would vigorously defend itself and its employees against Farmland’s frivolous claims.”
Report by Lawrence Delevingne in Boston. Editing by Greg Roumeliotis and Nick Zieminski
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