Short Seller Who Used Alias to Slam Company Forced Into Open

(Bloomberg) -- A short seller who used an alias to write a blistering critique of real-estate investment trust Farmland Partners Inc. has disclosed his identity to comply with an order by a federal judge.

Quinton Mathews, managing member of the Dallas-based investment advisory firm QKM LLC, revealed himself Monday in a blog post on the Seeking Alpha website to meet a court-imposed deadline in a defamation lawsuit. Mathews said he stands by the July 2018 article on Seeking Alpha he authored under the name Rota Fortunae about Farmland’s alleged financial woes.

“Short sellers serve as a vital counterbalance to Wall Street’s incentive-driven bullishness,” Mathews, 38, said in the post on Monday. “Unfortunately, there is a growing chorus of public companies willing to wield their power to quash free speech in an effort to stamp out critical opinions.”

Publishing anonymously isn’t unusual for short sellers, who seek to profit from exposing corporate irregularities and want to avoid backlash from companies and governments. Arnaud Vagner revealed he was behind an Iceberg Research campaign alleging accounting problems at commodity trader Noble Group Ltd., and Muddy Waters LLC used the alias Dupre Analytics to link China Zhongwang Holdings Ltd. founder Liu Zhongtian to fraud over aluminum stockpiles.

Share Plunge

Farmland, based in Denver, sued Rota Fortunae in July 2018, accusing the then-unknown individual of illegally seeking to profit from a sharp decline in the company’s stock by issuing false and misleading information on Seeking Alpha and Twitter as part of an alleged “short and distort” scheme.

The company, which owns about 156,500 acres of farmland in 16 states, said a lawyer for Rota Fortunae gave it only 24 hours to respond to dozens of questions about Farmland’s finances before publishing the post to Seeking Alpha’s millions of site visitors.

The “spurious” article falsely claimed that Farmland was artificially inflating revenue by making loans to tenants and had a “significant risk of insolvency,” among other things, according to the complaint. The shares fell 39% on July 11, after the article was posted.

“This is not a case about free speech, or a case about shorting stock,” Farmland Chief Executive Officer Paul Pittman said in a phone call Monday while examining farmland in Georgia and South Carolina. “It’s about a conspiracy using those two things to rip off the market and shareholders and damage a legitimate company.”

Rota Fortunae and other unknown individuals, known as John/Jane Does 2-10, had a “meeting of the minds on the object to be accomplished, agreeing to cause Farmland Partners’ stock price to decline so they would profit illegally from short positions,” Farmland said in the complaint, which was moved from state court to federal court a few months after it was filed.

‘Meticulously Disclosed’

Mathews argues he did nothing wrong. In a 2018 motion to dismiss the suit, he said his article revealed that he held a short position in Farmland, encouraged readers to do their own research and “meticulously disclosed all the facts upon which he based his analysis and conclusions.”

Mathews also argued that Pittman has repeatedly expressed animosity toward short sellers, saying on one occasion that they are going to get “killed” and “I will be cheering the day it happens,” according to the court filing. Farmland calls that claim in particular a “malicious” attack on Pittman’s defense of his company.

The motion to dismiss the case was denied, triggering a process for exchanging information that quickly came into conflict with Mathews’s attempt to remain anonymous.

On May 18, U.S. Magistrate Judge Kristen Mix granted Farmland’s request for a court order forcing Rota Fortunae to identify himself. Mix said she was sympathetic with Mathews’s desire to remain anonymous and said it held weight under the First Amendment. But his continued use of the pseudonym hindered Farmland’s ability to seek documents from third parties, she said.

Farmland “has alleged a compelling need for the information it seeks,” Mix held.

The judge said a trial could be held as soon as June 2021.

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