SEC investigating Melvin Capital

Per Fox News:

The SEC is looking into Melvin Capital Management risk controls and investor disclosure after the hedge fund was crippled by the meme-stock rally last year, said people familiar with the matter originally to WSJ.

The regulator has contacted investors in the hedge fund in recent months as part of an investigation into what Melvin founder Gabriel Plotkin and other senior executives told them in the wake of the meme-stock rally in January 2021, and whether it misled investors when it raised money last year.

The SEC has obtained from Melvin, which has largely returned its clients’ money, its general communications with investors and has sought information about what the firm disclosed about the risks of its investment strategy to clients, the people said.

Melvin Capital boasted a large short position on GameStop. They have since closed shop, due to continual losses after never recovering from $GME.