Hunterbrook, a combination hedge fund and newsroom that has raised $US100 million to invest, published its first investigation last week targeting the largest US wholesale mortgage lender.
Mr Hempton said the US Supreme Court had interpreted the country’s First Amendment as extending to short selling, as long as the speaker believed its claims.In addition, Australia’s insider trading laws work differently to the US, said Mr Hempton who has shorted stocks including fraudulent German payments companyThe American laws focus on whether the information was obtained from an insider directly, especially with inducements, whereas in Australia they focus on the kind of information itself.
Hunterbrook states on its website that it does not trade on insider information reported by its newsroom, and that its hedge fund does not interfere with its journalism. The company has no plans to open up a local newsroom or hire journalists in Australia.Finally, Mr Hempton claimed, the Australian Securities and Investments Commission was “deeply deficient” in the way it policed the markets and protected companies against legitimate short criticism.
The venture comes as news businesses face pressure globally, with advertising falling and major US outlets Vice, Buzzfeed News and FiveThirtyEight all closing last year.Economist Richard Holden said the Hunterbrook model could help media outlets capture more of the value of efficient markets that they created, but that independence would be a challenge.“I don’t think you want the compensation of the journalism side to be points in the fund or performance bonuses...