Wall Street’s feared short sellers expose a $42 billion financial giant.

TLDR:

American financial services giant MSCI is facing criticism from short-seller Spruce Point Capital Management, which argues that the company’s weak growth prospects, unsustainable valuation, and dubious accounting and financial reporting choices could lead its stock to plummet 55% to 65%. Spruce Point also claims that MSCI would receive a failing ESG rating if evaluated, due to its governance issues that have an air of nepotism. MSCI refutes these claims and asserts that the report contains misleading, incomplete, and false information.

Key Elements:

• MSCI, a major provider of equity, fixed income, and real estate indexes, as well as analytics tools and ESG ratings, is accused by short-seller Spruce Point Capital Management of having weak growth prospects and unsustainable valuation potential. Spruce Point argues that MSCI’s stock could plummet 55% to 65%.
• Spruce Point claims that MSCI has governance issues characterized by nepotism, as well as accounting and financial reporting problems. The short-seller alleges that MSCI engages in value-destructive acquisitions, manipulative accounting tactics, and abusive financial reporting techniques.
• MSCI’s representative denies Spruce Point’s claims and asserts that the report contains misleading, incomplete, and false information. The company insists that it has a strong culture of compliance and ethics grounded in its code of conduct and commitment to leading corporate governance practices.
• Spruce Point’s main concerns about MSCI include its lofty valuation compared to peers, declining client retention rates, questionable acquisitions, and indications of nepotism. The short-seller argues that MSCI’s governance issues are so significant that the company would likely receive a failing ESG rating overall.