When the SEC issued its cease-and-desist order in opposition to Anson Funds Administration LP and Anson Advisors Inc. on June 11, 2024, it didn’t simply wonderful a hedge fund. It formally confirmed — on the general public document — {that a} coordinated, multi-year market manipulation scheme operated from not less than 2018 by way of 2023, concentrating on public corporations and their shareholders. Barry Honig, who misplaced tens of millions on account of two of these assaults, now seeks civil redress in a lawsuit filed within the Northern District of Texas.
This text walks by way of what the regulatory document reveals, what the indictment provides, and what the civil grievance filed Could 6, 2026 — Honig v. Anson Funds Administration LP et al., Case No. 3:26-cv-01167-S — alleges in consequence.
The SEC’s Findings: A Confirmed Scheme, Not a Principle
The SEC’s administrative order (Inv. Adv. Act Rel. No. 6622) is the muse of the case in opposition to Anson. The order discovered that Anson Funds and Anson Advisors, co-advisers of the Anson Investments Grasp Fund (AIMF), willfully violated a number of provisions of the Funding Advisers Act:
Part 206(4) and Rule 206(4)-8 — anti-fraud provisions relevant to funding advisers managing pooled autos;
Sections 204 and Rule 204-2 — recordkeeping obligations;
Rule 206(4)-7 — compliance procedures.
The operative discovering: Anson’s Non-public Placement Memorandum described a short-selling technique however materially omitted that the technique concerned (a) coordinating with activist brief publishers; (b) buying and selling round these publications; and (c) compensating publishers with a share of AIMF’s buying and selling income in trade for advance entry to their work.
‘From not less than 2018 by way of 2023, the Non-public Placement Memorandum for Anson Investments Grasp Fund described a brief place funding technique… however omitted that AIMF’s funding technique concerned working with activist brief publishers and buying and selling within the goal securities, together with across the time the studies had been issued by activist brief publishers, and paying a portion of AIMF’s buying and selling income to the brief publishers.’ — SEC Order, Rel. No. 6622, June 11, 2024
The SEC discovered that Anson’s share of income paid to ‘Particular person A’ (recognized within the civil grievance as Andrew Left of Citron Analysis) exceeded $1.1 million in reference to simply two goal securities. Critically, these funds weren’t made straight. Anson routed them by way of a third-party middleman — recognized within the civil grievance as Kurt Feshbach of Falcon Analysis — utilizing invoices for purported ‘analysis providers’ that had been by no means carried out. Anson then recorded these funds on its books as funds to Falcon for analysis, in violation of the Advisers Act’s books-and-records necessities.
The DOJ Indictment: Legal Costs That Mirror the SEC Findings
On July 25, 2024, a federal grand jury within the Central District of California returned a 19-count indictment in opposition to Andrew Left (United States v. Andrew Left, No. 2:24-cr-00456-TJH), charging him with one depend of partaking in a securities fraud scheme, 17 counts of securities fraud, and one depend of creating false statements to federal investigators.
The indictment references a ‘Hedge Fund A’ that paid Left by way of ‘Particular person F’ by way of a third-party middleman — language that maps straight onto Anson and Feshbach as recognized within the civil grievance. Left is alleged to have shared deliberate unfavourable publications with Hedge Fund A prematurely, permitting the fund to ascertain brief positions earlier than studies had been launched, then cowl these positions after costs declined — producing tens of millions in buying and selling income that had been then shared with Left.
The DOJ’s idea of criminality: Left’s publications weren’t impartial analysis however paid promotional assaults. His representations to traders that Citron had ‘by no means been compensated by a 3rd occasion to publish analysis’ had been, the federal government alleges, merely false. In August 2019, Left made exactly that declare publicly. The indictment characterizes this as a cloth misrepresentation to traders who relied on Citron’s purported independence.
The indictment additionally expressly names PolarityTE as one of many corporations focused by the scheme — offering a direct evidentiary basis for the civil claims now pending in Dallas.
III. The PolarityTE Assaults: False Claims, Actual Injury
The civil grievance describes two coordinated Citron Analysis assaults on PolarityTE in 2018, each of which the plaintiffs allege had been orchestrated by Anson and executed by way of Left:
Assault 1 — June 25, 2018: Citron printed a report entitled ‘Citron Exposes Historical past of FRAUD Behind PolarityTE.’ The central declare: PolarityTE’s patent utility was ‘useless on arrival’ following a USPTO rejection discover. The report referred to as the scenario ‘not solely securities fraud, however… prison and never simply civil fraud.’
The authorized and factual downside: A USPTO ‘remaining rejection’ is a time period of artwork, not a terminal occasion. Below 37 C.F.R. §§ 1.113 and 1.114, an applicant receiving a remaining workplace motion has six months to file a Request for Continued Examination (RCE), amend the appliance, or submit new proof. Statistics bear out that candidates who proceed prosecution after a remaining rejection obtain a patent roughly 70% of the time. PolarityTE filed an RCE, continued prosecution, and was in the end granted Patent No. US 10,92,001 B2 in February 2021 — two and a half years after Citron declared the appliance useless. The category motion lawsuit premised on the patent narrative was subsequently dismissed.
Assault 2 — October 18, 2018: A second Citron report, ‘PolarityTE: This Sport Is Over! Worth Goal -$2,’ recycled the patent misrepresentation and launched a brand new assault: a normal FDA Kind 483 ‘inspectional observations’ letter, which the report characterised as proof that the FDA had ‘confirmed’ PolarityTE was a ‘inventory scheme.’ The FDA Kind 483, by its specific phrases, ‘doesn’t signify a remaining Company dedication concerning [the company’s] compliance.’ The FDA took no additional regulatory motion.
Market impression: The primary assault triggered a single-day decline exceeding 33%, and practically 50% inside per week. The second assault triggered an extra 17% decline. Mixed, the assaults destroyed institutional confidence within the firm. Unable to boost capital on market-rate phrases, PolarityTE was compelled into poisonous financing preparations that additional eroded its steadiness sheet, in the end resulting in a chapter submitting in June 2023. Shares went to zero.
The Civil Claims: What Honig Is Searching for
Filed within the Northern District of Texas (which has jurisdiction given Anson Funds’ Texas domicile), the First Amended Grievance asserts 5 causes of motion underneath Texas regulation:
- Enterprise Disparagement — False and malicious statements that triggered financial hurt to Honig’s funding pursuits in PolarityTE.
- Tortious Interference — Honig held most popular convertible shares in PolarityTE underneath publicly disclosed contracts; Defendants’ manipulation of PolarityTE’s inventory worth straight affected the conversion components in these contracts, impairing their worth.
- Negligence — Obligation owed to shareholders of focused corporations; breach by way of coordinated false publication marketing campaign.
- Gross Negligence — Acutely aware indifference to the danger of economic hurt.
- Civil Conspiracy — Every defendant agreed with others to commit the underlying torts; joint and a number of other legal responsibility is sought.
Vicarious legal responsibility can be pled: Kassam and Puri’s conduct occurred inside the scope of their roles at Anson; Anson is liable underneath respondeat superior.
On the statute of limitations, the grievance invokes the invention rule: the scheme’s existence was not publicly knowable till the DOJ indictment and SEC enforcement motion had been introduced in July 2024. The grievance alleges Honig couldn’t, by way of affordable diligence, have recognized the hid coordination between Anson, Left, and Choi earlier than that date.
The Broader Accountability Image
This isn’t a case the place a plaintiff is difficult opinions or subjective evaluation. The SEC order, the DOJ indictment, and the settling defendants’ personal funds have already established the factual core of the scheme on the general public document. Choi paid over $1.8 million to settle SEC fees and is cooperating with the DOJ prosecution. Anson paid $2.25 million in civil penalties and is cooperating. Left faces 19 prison counts and potential a long time in jail.
What the civil litigation in Dallas provides is accountability to the shareholders who had been neither named events within the SEC motion nor compensated by Anson’s penalty funds. The SEC’s enforcement mandate is systemic deterrence; civil litigation is the mechanism by which particular person victims — together with Honig, whose entities held practically 10% of PolarityTE on the time of the assaults — search to recuperate precise losses.
The broader significance: the Left trial, at the moment scheduled for 2026, will expose the total structure of a short-and-distort infrastructure that operated for 5 years throughout greater than a dozen public corporations. For the businesses and shareholders who had been focused — and for the market integrity ideas at stake — that trial represents probably the most consequential public reckoning but with the mechanics of coordinated market manipulation.
Seven years is a very long time to attend for the document to be set straight. The document is now being set.
