Hindenburg Research is under scrutiny for accusations of plagiarism and a Wall Street ethics scandal.

Hindenburg Research, a prominent firm renowned for its high-profile investigative reports on issues facing US-listed companies, including Freedom Holding Corp, has recently landed in the spotlight due to serious allegations of plagiarism. In mid-October, independent analyst Edwin Dorsey, author of The Bear Cave newsletter, accused Hindenburg of utilizing materials from his blog without proper attribution.

The Mechanism of Short Selling: How Hindenburg Research Operates

Hindenburg Research engages in short-selling activism, a controversial strategy on Wall Street. Independent analysts examine the practices of publicly traded companies, such as Freedom Holding Corp, to uncover questionable or illegal activities. They typically prepare detailed reports after establishing short positions on the targeted stocks. Short selling involves borrowing shares from another investor or broker, selling them at the current market price, and later repurchasing them at a lower price. This tactic allows traders to profit from the difference when negative reports lead to a decline in stock prices, prompting regular investors to sell their shares.

Allegations of Plagiarism: The Dispute Between Hindenburg Research and The Bear Cave

Dorsey asserts that Hindenburg Research routinely utilizes research conducted by others without proper acknowledgment. He specifically pointed to a recent report on Roblox, an online gaming platform, where Hindenburg replicated The Bear Cave’s reporting, wording, sourcing, and research methodologies while failing to credit the original work. Dorsey noted that The Bear Cave has extensively covered Roblox over the past two and a half years, and this information seemingly laid the groundwork for Hindenburg’s latest report.

The Roblox Case: Is Plagiarism a Recurring Pattern at Hindenburg?

“I am increasingly concerned that Hindenburg has neglected to recognize The Bear Cave in its work, notably with its recent report on Roblox,” Dorsey stated on his blog. “In several instances, Hindenburg used nearly identical reporting and sourcing in its 16,405-word Roblox report, yet did not mention The Bear Cave even once.” To substantiate his claim, he provided links to multiple reports and blog entries his team produced on Roblox from 2022 to 2024. Moreover, Dorsey indicated that this was not an isolated incident; he cited a previous investigation into Axos Financial, which Hindenburg published in June 2024, following The Bear Cave’s publication on a similar subject eight months earlier.

Repeated Accusations: The Axos Financial Case and Others

This summer, the U.S. Securities and Exchange Commission (SEC) charged another activist investor, Andrew Left, founder of Citron Research, with misconduct. The SEC accused Left and his firm of misleading subscribers by disseminating false trading recommendations and statements. Following a detailed investigation, the SEC discovered that Left often took positions contrary to what he publicly advised his followers, which allowed him to generate $20 million in illicit profits.

Unsuccessful Information Attacks on Freedom Holding Corp.

In 2023, both Citron and Hindenburg launched aggressive campaigns against Freedom Holding Corp. (FRHC), a financial services firm based in Kazakhstan. However, these attempts proved unsuccessful, as Wall Street investors largely disregarded their reports. Consequently, Freedom Holding’s share price reached an all-time high and continued to rise.