(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 claiming that Arbor Realty (NYSE:) Trust, which invests in a diversified portfolio of structured finance assets, had a distressed loan portfolio.
Viceroy Research alleged that Arbor’s underlying collateral for the loans is vastly overstated, adding that the loans are not eligible for refinancing anywhere and are nearing maturity.
NINGI Research accused the company of hiding a “toxic” mobile home real estate portfolio with a “complex web” of real and fake holdings for more than a decade.
“We routinely cooperate with regulatory investigations and are confident that we are conducting ourselves well. We look forward to our second quarter earnings results,” Arbor said in an email to Reuters.
Arbor has refuted these brief reports, claiming that the reports contain “numerous inaccuracies” and “inaccuracies.”
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.
