This article first appeared on GuruFocus .
Abaxx Technologies Inc. ( ABXXF ) is moving to defend itself after Viceroy Research disclosed a short position and published allegations against the company. The Toronto-based market infrastructure firm has asked Canadian market regulators to review whether manipulative trading occurred in its shares, while also hiring Paul Weiss to help respond to the short-selling campaign.
Abaxx said it contacted CIRO to request a review of trading activity by Viceroy and other parties, and its Singapore business also proactively contacted the Monetary Authority of Singapore regarding the allegations. Viceroy argued that Abaxx Exchange activity could appear stronger than it really is, pointing to low open interest, trades that appear to offset one another, and trading spikes around investor events and company announcements.
The company rejected the claims as unfounded and defamatory, describing them as part of a short-and-distort campaign that could be designed to profit from a falling share price. Shares have dropped 25% since June 10, giving Abaxx a market capitalization of C$1.3 billion, while the company said it has enough cash to fund roughly seven quarters of operations and reported June average daily volume up 12% from May, with open interest rising more than threefold.
