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Alberta securities regulator seeks cease-trade order against short-seller Marc Cohodes

Alberta’s securities regulator is seeking to block prominent short-seller Marc Cohodes from trading in securities of Badger Daylighting Ltd., escalating a bitter feud between the oil-field services company and the U.S. investor.

The Alberta Securities Commission (ASC) said on Thursday that it is seeking the interim order on grounds that Mr. Cohodes has misrepresented Badger’s business – including allegations of illegal dumping – to support his short position in the stock. The order, if granted, would also prohibit him from spreading false or misleading statements about Badger.

Reached by phone on Thursday, Mr. Cohodes rejected the allegations, none of which have been tested in court.

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“It’s beyond preposterous. It’s beyond kangaroo-ish,” he said. “There will be full disclosure of everything that has gone on, will go on and everything will come out. They want to play that game? No problem."

Mr. Cohodes, who has bet against shares of Valeant Pharmaceuticals International Inc. and Home Capital Group Inc., has accused Badger of faulty accounting while arguing the shares are overvalued.

Last May, Badger said the ASC had completed an investigation into allegations by short-sellers and found no wrongdoing. Badger shares are up about 10.5 per cent this year.

The ASC cited a June 27, 2018, post on Twitter in which it said Mr. Cohodes misrepresented an image of a Badger truck to support his allegation of “illegal toxic dumping" – one of “numerous public claims of a similar nature over a period of more than a year.”

Mr. Cohodes was defiant: “This just goes completely against free speech. I’m not Canadian, and if people don’t like it, they don’t need to read my Twitter. I stand behind everything that’s out there.”

The short-seller has been active in Canada, first with his aggressive Home Capital short, and then also targeting Winnipeg-based Exchange Income Corp. He argued the owner of aviation and manufacturing businesses didn’t have adequate cash flow to pay its dividend, but also made allegations about the safety of its planes.

In recent weeks, Mr. Cohodes has been taking a victory lap as U.S. health-care company MiMedx Group Inc., a stock he had been shorting and publicly battering on Twitter, said it needed to restate financials going back to 2012. The company’s chief executive has resigned, the shares have plummeted and the company was the subject of a front-page examination in the Wall Street Journal in late July.

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Mr. Cohodes disclosed his short position in Badger in May, 2017. The company did not return messages on Thursday. The ASC application is slated to be heard Aug. 15 in Calgary.

With a file from David Milstead

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