(Reuters) – Arbor Realty Trust is under investigation 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.
The company's shares fell more than 19% in afternoon trading.
In 2023, short sellers including Viceroy Research and NINGI Research published reports alleging that Arbor Realty (NYSE:) Trust, which invests in a diversified portfolio of structured finance assets, had a portfolio of distressed loans.
Viceroy Research said Arbor's underlying collateral for the loans is grossly overstated, adding that the loans do not qualify for refinancing anywhere and are nearing maturity.
NINGI Research accused the firm of hiding a “toxic” mobile home real estate portfolio with “a complex network” of real and fake holding companies for more than a decade.
“We routinely cooperate with regulatory investigations and are very confident that we conducted ourselves appropriately. We look forward to our second quarter earnings call,” Arbor said in an email to Reuters.
Arbour has refuted these brief reports, saying they contain “numerous inaccuracies” and “misstatements.”
Federal investigators are now looking into the New York-based company's lending practices and its claims about the performance of its loan portfolio, Bloomberg reported, citing sources familiar with the matter.
The Justice Department did not immediately respond to Reuters' request for comment.
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