Picture: 123RF / ALEXLMX
Picture: 123RF / ALEXLMX

Viceroy Research, the self-proclaimed crusader against corporate malfeasance, would probably not pass anti-money laundering requirements necessary to open a stockbroking account in its own name.

This was the view of Intellidex, who upped the ante on Thursday in the wake of the critical report it released after being commissioned by Business Leadership SA (BLSA) to look into the issue of short selling in the age of fake news. The report was highly critical of Viceroy, suggesting the hitherto obscure firm has falsely risen to prominence in SA by publishing a report into Steinhoff that it had extensively plagiarised. Its subsequent report into Capitec was less well received.

This was part of a broader thrust that highlighted the scepticism as to how Viceroy generates income and is compensated for the research it claims to undertake. "We found no evidence of Viceroy being a registered entity with any legal status to trade," says Stuart Theobald, the lead author of the report via teleconference at the press conference held by BLSA into the matter.

Viceroy warns readers in its disclaimer that the firm "may have direct or indirect positions" in the stocks mentioned in the report and could stand to gain from the fall in any price of its shares. Theobald was sceptical of this: "The three principals might have trading accounts in their own names but it is unlikely they would be able to trade large amounts like that of a registered hedge fund."

He then raised the question of how Viceroy is compensated for its research.

The only entity Intellidex could find that was linked to the three principals was a company incorporated in the UK in August last year called Ganadabi Ltd. Its primary business activity was listed as "other publishing". The company has not had to file its annual accounts as yet. Intellidex speculated that the firm was probably compensated by donations from funds it did work for.

In its response to the Intellidex report, Viceroy denied being compensated through donations. It also categorically denied having any business relationship with any of the individuals or funds cited as the "ecosystem" feeding Viceroy research as indicated in Intellidex’s report. Viceroy repeated its assertion that its work "is funded internally".

It was not clear whether this meant profits made from its positions on the companies it covers was the source of these internal funds.

Viceroy also confirmed that it is regulated, but did not state in which jurisdiction or for what regulated activity it participated in.

The firm did not reply directly to allegations of plagiarism, instead describing how it received "a significant amount of anonymous data relating to companies worldwide on a regular basis", which was the case with Steinhoff. Viceroy said this data is incorporated into reports when it can be verified.

No other details of its business model or income were provided.