American healthcare real estate company Medical Properties Trust (MPT) has started a defamation lawsuit in a US federal court against short-selling Viceroy Research and its three members over what it says are bogus, fake and fraudulent financial analysis reports linking it to medical company Steward Healthcare International (SHCI) Malta hospitals issue.
One of the biggest real estate medical companies in America, MPT has sued for defamation the Viceroy Research LLC and its members Fraser John Perring, Gabriel Bernarde and Aidan Lau following the short-selling Viceroy Research “repeatedly publishing baseless allegations to drive down the company’s stock price”.
MPT maintains in its scathing filing that Viceroy Research has been involved in a conspiracy against the company to make money by spreading false news and therefore the lawsuit seeks permanent injunctive relief, disgorgement of ill-gotten gains, compensatory and punitive damages from Viceroy for defamation, civil conspiracy, tortious interference, private nuisance, and unjust enrichment.
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MPT, which leases hospital property to medical groups in the United States, has told the District Court of Alabama that Viceroy Research deliberately and maliciously lied in its reports “about its connections to Steward” in Malta for nefarious purposes and to “prop up its short attack” against the company by claiming it is deliberately concealing secret ownership in Steward-connected hospitals in Malta. MPT has denied any links in its legal claim filed in the state of Alabama where MPT headquarters are based.
“These are falsehoods, ginned up to try to undercut investor and public confidence in MPT and harm the company,” says MTP said in court filings, describing Viceroy Research’s reports as completely false and a clear-cut case of market manipulation aimed at driving down MPT’s share price in a clear case of short-selling exercise. MPT says in its claim that Viceroy Research and its team – Fraser John Perring, Gabriel Bernarde, and Aidan Lau – are “in the business of mounting serial short-and-distort attacks against public companies” and that “MPT is their latest victim” as MPT has been linked by them with the Malta deal, maliciously and falsely, in a bid to damage its share price and make a short-selling profit off what it says was bogus research it published. MPT has alleged that for months, Viceroy Research, its three members and their cohorts have been spreading malicious falsehoods about MP and in late January 2023 announced it held a short position in MPT and simultaneously published the first of 14 “reports” on the Company in a steady stream. The lawsuit says Viceroy Research made false accusations that MPT purportedly engages in illegal “round-trip” transactions by “overpaying” owners of hospital properties and leasing those properties back to the sellers and that MPT executives were engaging in “fraud” and juicing their own compensation. At the same time, the lawsuit says, Viceroy, Fraser and others started a Twitter campaign using the hashtags “#fraud” and “#Ponzi scheme”— urging investors to dump MPT stock, accusing MPT of “involvement in #Corruption” and “scamming investors,” and promising his followers that MPT’s “employees will go to prison.” Since Viceroy began its attacks, MPT’s stock price is down over 35 percent, a potential counterparty has pulled away from a commercial transaction, and MPT has had to increase physical security at its Birmingham headquarters. Several analysts who follow MPT have observed the impact that the short attack has had on the stock.”
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The claim says Viceroy Research LLC is a self-described “financial research” firm that publishes negative content about public companies whose shares it has sold short; its co-founders are Defendants Fraser John Perring, Gabriel Bernarde, and Aidan Lau; Viceroy has no headquarters or employees, observes few if any corporate formalities, exists solely to shield its owners from personal liability for their short-and-distort schemes and that Viceroy’s limited liability structure does not shield Perring, Bernarde, and Lau from personal liability for Viceroy’s tortious and unlawful actions. The lawsuit gives an example of a South African case in January 2018 where Viceroy called South African bank Capitec “[a] wolf in sheep’s clothing” and a “loan shark . . . masquerading as a community microfinance provider.” During the investigation the Financial Sector Conduct Authority (FSCA) fined Viceroy’s members 50 million Rand (about $2.8 million) for having “made a concerted effort to publish . . . false, misleading and deceptive [statements] regarding material facts” and having demonstrated “no interest in setting the record straight” when “presented with clear explanations for why their statements had been false.”
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The lawsuit says the defendants, in an effort to prop up their short attack, have accused MPT of lying about its connections to Steward. In particular, they have released a series of reports claiming that MPT is deliberately concealing a secret ownership in certain Steward-connected hospitals in Malta. “These are falsehoods, ginned up to try to undercut investor and public confidence in MPT and harm the Company.” Lawyers of MPT have told the court that Viceroy and Fraser John Perring made accusations of scamming and fraud and encouraged criminal investigations as part of their campaign to artificially depress MPT’s stock price and they coupled their targeted false statements with extravagant accusations of criminal wrongdoing. In particular, the legal claim says Fraser Perring used his Twitter to post a steady barrage of false statements, referring to MPT as a “fraud”, “fraudulent”; “scam”, “rotten to the core,”, “corruption,” and “Ponzi”. The lawsuit informs the court that Viceroy tries to couch its “slanderous falsehoods” as opinions by using qualifiers like “believe” and “appear” but these disclaimers are contradicted, however, by Viceroy’s boast that its “mission is to sift fact from fiction” and the false, misleading, and defamatory statements are not “opinions” or “beliefs” but rather statements of purported fact, whose fundamental character cannot be altered by disclaimers.
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The lawsuit says: “Unfortunately, lies that are repeated often enough can begin in some people’s minds to resemble the truth.
This has caused concrete and ongoing harm to MPT. Defendants’ defamation has damaged MPT’s reputation with potential commercial counterparties. Earlier this month, for example, Steward sought to broker a deal with University Health System, in Bexar County, Texas, involving a hospital owned by MPT. University Health pulled away from the deal, citing one of Viceroy’s reports and stating publicly that “our mission and values are not aligned with Medical Properties Trust.
Defendants’ defamation has also damaged, and continues to damage, MPT’s relationship with its shareholders.
“In addition to defaming MPT as a company, Defendants have also attacked MPT’s executives personally. In particular, Defendants have published disparaging remarks about CEO Ed Aldag in an attempt to damage his reputation.
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As a result of the nuisance created by Defendants, prays the claim, MPT is entitled to injunctive relief, as well as compensatory and punitive damages in an amount to be proven at trial.
Defendants also have benefited at the expense of MPT’s shareholders. MPT reasonably expects that Defendants will compensate MPT for the benefits Defendants have received unjustly and without MPT’s consent. It would be inequitable to allow Defendants to retain their ill-gotten gains, borne of their malicious and illicit short-and-distort scheme. Therefore, MPT is entitled to an order requiring Defendants to disgorge the benefits by which Defendants were unjustly enriched. Alternatively, a constructive trust should be imposed upon those benefits, to be forfeited and disposed of pursuant to the Court’s instructions.”