Marex stock falls after Ningi Research issues short report

Investing.com -- Marex Group plc (NASDAQ:MRX) stock fell 3.4% after Ningi Research published a short report alleging accounting irregularities and financial manipulation at the commodities broker.

The research firm claimed Marex has engaged in "a multi-year accounting scheme" involving off-balance-sheet entities, fictitious transactions, and misleading disclosures to conceal losses and inflate profits. Ningi described Marex as "a financial house of cards" with unreliable financial statements.

Among the allegations, Ningi Research claims Marex used an opaque fund structure in Luxembourg to manipulate earnings and mask risk, including a bailout of a failed volatility fund in 2020 that concealed an estimated $27 million loss. The report also alleges Marex created an undisclosed off-balance-sheet entity called "Marex Fund" holding over $930 million in derivatives.

The short seller further accused Marex of exploiting revenue recognition policies by selling OTC financial instruments to its secretly controlled off-balance-sheet fund, allowing executives to book immediate "fair value" gains and create "the illusion of massive profitability."

Ningi also highlighted what it calls fictitious cash flow reporting, claiming Marex improperly includes debt issuance in operating cash flow, which competitors like BGC and StoneX reportedly do not do. According to the report, when adjusted for this practice, Marex’s operating cash flow was negative $150 million in 2024 and negative $258 million in 2023.

The report draws connections between current Marex executives and Lehman Brothers’ collapse, noting that CEO Ian Lowitt was allegedly involved in Lehman’s "Repo 105" accounting scandal. It also points to aggressive insider selling, with private equity backers reportedly cashing out $1.13 billion since the company’s April 2024 IPO.

Marex Group had not publicly responded to the allegations at the time of publication.

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