(Reuters) – Arbor Realty Trust is being probed by Federal prosecutors and the Federal Bureau of Investigation in New York months after short sellers attacked the lender’s practices and disclosures, Bloomberg News reported on Friday.
Shares of the company fell more than 19% in afternoon trading.
The Department of Justice and Arbor Realty did not immediately respond to Reuters’ request for comment.
In 2023, short sellers, including Viceroy Research and NINGI Research, published reports alleging that Arbor Realty Trust, which invests in a diversified portfolio of structured finance assets, had a distressed loan book.
Viceroy Research claimed that Arbor’s underlying collateral for the loans is vastly overstated, adding that the loans do not qualify for refinancing anywhere and are nearing maturity.
NINGI Research accused the company of concealing a ‘toxic’ real estate portfolio of mobile homes with ‘a complex web’ of real and fake holding companies for over a decade.
Arbor has countered these short reports, asserting that the reports contain ‘numerous inaccuracies’ and ‘misstatements’.
Federal investigators are now probing the New York-based company’s lending practices and its claims about the performance of its loan book, Bloomberg reported, citing sources familiar with the matter.
(Reporting by Ananta Agarwal in Bengaluru; Editing by Tasim Zahid)
