Short-selling Viceroy Research has come under intense scrutiny after a Labour MP known for his human rights work accused the firm of having Russian state links and the controversy has grown further with the involvement of another parliamentarian.
The issue came to the surface when Labour MP Liam Byrne, a former chief secretary to the Treasury and MP for Birmingham Hodge Hill, said during a speech in the parliament that Fraser John Perring, head of short-selling firm Viceroy Research, was “a not infrequent visitor to Moscow” and that he had acted “hand in glove” with another firm, Boatman Capital, to launch a short-selling attack on UK defence group Babcock.
Since then the issue has grown further after Leader of the House of Commons Penny Mordaunt MP assured that she will raise the issue of short-seller Viceroy Research and its head Fraser John Perring’s Russian state links with Britain’s Security Minister.
The Kremlin links speech set off a blazing debate and another MP Edward Leigh has waded into the debate with a letter to Byrne for clarification. A spokesman of MP Edward Leigh said he had written to the Labour MP on the request of Fraser Perring who is a constituent of the Conservative MP for Gainsborough, Lincolnshire.
Labour MP Liam Byrne raised the Russian links alarm during a debate in the House of Commons and asked the British government to look into the activities of Viceroy Research and its leader Fraser John Perring as a matter of urgency.
Penny Mordaunt MP, who has previously served as Minister of State for the Armed Forces, thanked the Labour MP for raising questions on Viceroy Research’s “very important matter”.
The Leader of the House of Commons said: “I will ensure that the Security Minister has heard his concerns. He is overseeing the strengthening of the architecture in government to identify what is going on behind particular deals.”
She said the govt has in recent years “strengthened capacity in government to spot what is going on and to ensure that everyone is wide-eyed about it. I will raise this case with the Security Minister”.
Sources have said that the leader of the House of Commons has already raised the issue with the Minister of Security who is looking into the serious concern. The Minister, said the source, has expressed alarm at the revelations in the House of Commons.
Labour MP Liam Byrne spoke in a debate in the parliament during the Business Question time. The Labour MP said the issue of Russian links of Viceroy Research and its leader Fraser Perring was serious in nature and that there should be a proper debate in the parliament.
Addressing his questions to Tom Tugendhat MBE, the Minister for Security, the Labour MP said a debate in the parliament was necessary “on the activities of short-selling attack group Viceroy Research and its leader Fraser Perring”.
Liam Byrne said he has been told that Viceroy Research “works hand in glove with Boatman Capital, which launched the short-selling attack on Babcock International while it was overhauling our nuclear submarines”.
Liam Byrne raised questions about visits of Fraser Perring to Russia on a frequent basis. He said: “Mr John Fraser Perring is a not infrequent visitor to Moscow, and is now targeting Home REIT, which provides homelessness services, including to homeless veterans. We must ensure that short-selling groups are not another weapon in Putin’s arsenal. Where there are links between short-selling attack groups and the Kremlins, we need to know.”
Viceroy’s methods and ethics have long been called into question over several years. They have been the subject of allegations of plagiarism in the past and successfully sued for fake and defamatory statements. Commissioned by Business Leadership South Africa, Intellidex had reported that Viceroy’s Steinhoff report was substantially plagiarised from a report produced by hedge fund Portsea Asset Management. The Intellidex report had said that Viceroy’s reporting varies wildly in quality and credibility and appears to interweave false statements into purported facts.
In two major litigation cases in the US and in South Africa, Fraser Perring was accused of conspiring to manipulate stock price, making false, defamatory, deceptive and misleading statements, impersonating personnel and creating fake whistleblowing accounts.
In 2021, the South African Financial Sector Conduct Authority (FSCA) fined Viceroy Research LLC and its partners Aiden Lau, Fraser John Perring and Gabriel Bernarde R50 million ($3.5 million fine) for damaging and false remarks that the short-selling firm made about South Africa’s Capitec Bank (SA’s then fourth-most valuable bank).
The remarks triggered a 25% slump in Capitec’s share price in January 2018, wiping out almost R10 billion in value. According to the judgment, Viceroy had an agreement with a hedge fund, Oasis, which made an estimated profit of R82 million amid the panic selling. The share of Viceroy in the profit from short positions taken by Oasis on Capitec was estimated by the authority to be close to $744 482 (R10 million at the time), shared equally among the partners.
After Viceroy published a report into MPW, JP Morgan reported they had poor quality of research and a lack of understanding of the financial and other details of the businesses they attacked.
German financial watchdog Bafin said Viceroy had breached German securities law and ProSiebenSat.1, the German mass media company, stated allegations made in a report by Viceroy were “unfounded and distorting reality”. Under German law, any entity that is not a securities firm, a fund manager, an EU administrative firm or an investment company that intends to publish recommendations on investments in assets must notify Bafin ahead of time, it said, adding that Viceroy’s website did not contain information on where the company was based.
Fraser John Perring himself – who has no financial training or background to speak of – has been described as dishonest by several reports and was struck off being a social worker due to falsifying records. Perring had been struck off the Health and Care Professionals Council (HCPC) Register for failing to contact a child’s extended family to arrange alternate care and then falsifying case records to cover his failure whilst working for Lincolnshire County Council.
Now, American real estate investment firm Medical Properties Trust (MPW) has announced that it has reported Viceroy Research and its three members Fraser John Perring, Gabriel Bernarde and Aidan Lau for market manipulation and wire fraud to the Securities and Exchange Commission (SEC) in the US, Australian Securities & Investments Commission (ASIC) in Australia and Financial Conduct Authority (FCA) in Britain. Since 2019 Viceroy has been based in the US after being convicted and fined for the same crime in South Africa.
MPT further announced it has started a defamation lawsuit in a US federal court against Viceroy Research and its three members over what it says are bogus, fake and fraudulent financial analysis reports linking it to medical company Steward Healthcare International (SHCI) Malta hospitals dispute.
MPT has sued for defamation the Viceroy Research LLC and its members Fraser John Perring, Gabriel Bernarde and Aidan Lau following the short-selling Viceroy Research “repeatedly publishing baseless allegations to drive down the company’s stock price”.
MPT maintains in its scathing filing that Viceroy Research has been involved in a conspiracy against the company to make money by spreading false news and therefore the lawsuit seeks permanent injunctive relief, disgorgement of ill-gotten gains, compensatory and punitive damages from Viceroy for defamation, civil conspiracy, tortious interference, private nuisance, and unjust enrichment.
MPT, which leases hospital property to medical groups in the United States, has told the District Court of Alabama that Viceroy Research deliberately and maliciously lied in its reports “about its connections to Steward” in Malta for nefarious purposes and to “prop up its short attack” against the company by claiming it is deliberately concealing secret ownership in Steward-connected hospitals in Malta. MPT has denied any links in its legal claim filed in the state of Alabama where MPT headquarters are based.
“These are falsehoods, ginned up to try to undercut investor and public confidence in MPT and harm the company,” says MTP said in court filings, describing Viceroy Research’s reports as completely false and a clear-cut case of market manipulation aimed at driving down MPT’s share price in a clear case of short-selling exercise.
MPT has alleged that for months, Viceroy Research, its three members and their cohorts have been spreading malicious falsehoods about MP and in late January 2023 announced it held a short position in MPT and simultaneously published the first of 14 “reports” on the Company in a steady stream.
MPT says: “Sometimes charlatans spread their lies to no effect. That, unfortunately, is not the case here. MPT brings this action to stop Defendants repeating their lies, to recover damages for the harm caused by those lies, and to compel Defendants to disgorge the ill-gotten gains earned on the back of those lies.”
The claim says Viceroy Research LLC is a self-described “financial research” firm that publishes negative content about public companies whose shares it has sold short; its co-founders are Defendants Fraser John Perring, Gabriel Bernarde, and Aidan Lau; Viceroy has no headquarters or employees, observes few if any corporate formalities, exists solely to shield its owners from personal liability for their short-and-distort schemes and that Viceroy’s limited liability structure does not shield Perring, Bernarde, and Lau from personal liability for Viceroy’s tortious and unlawful actions.