US prosecutors explore racketeering charges in short-seller probe

A racketeering case could allow prosecutors to ensnare a broad swathe of investors involved in an alleged "criminal enterprise," even if they participated indirectly, lawyers said. (File pic shows The Department of Justice building before dawn in Washington, D.C., U.S., on Tuesday, Feb. 9, 2021. )

NEW YORK/WASHINGTON: U.S. prosecutors are exploring whether they can use a federal law originally enacted to take down the mafia, in a sprawling probe of hedge funds and research firms that bet against stocks, according to two sources familiar with the situation.

The Justice Department last year issued subpoenas to dozens of firms, including such well-known names as Citron Research and Muddy Waters Research LLC, as part of the sweeping probe focused on potentially manipulative trading around negative reports on listed companies published by some of their investors, Reuters and other media have reported.