Case 2:24-cv-00175-JTJ Document 1 Filed 11/08/24 Page 1 of 24
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF MONTANA
`BUTTE DIVISION
`
`HOLBROOK HOLDINGS, INC.,
`
`v.
`
`MARC COHODES,
`
`Plaintiff,
`
`Defendant.
`
`Civil Action No. CV-24-175-BU-JTJ
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`JURY TRIAL DEMANDED
`
`Plaintiff Holbrook Holdings, Inc., for its complaint against Defendant Marc Cohodes,
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`COMPLAINT
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`alleges as follows:
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`NATURE OF THE ACTION
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`1.
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`Plaintiff Holbrook Holdings, Inc., an award-winning financial advisory firm with a
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`well-earned reputation for conducting itself with honesty, transparency, and the highest ethical
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`standards, brings this defamation action against short seller Marc Cohodes to hold Cohodes
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`responsible for a relentless, unhinged, and vindictive smear campaign that he has waged against
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`Holbrook over the past year.
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`2.
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`As a short seller, Cohodes essentially bets against the stock prices of companies
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`that he shorts, with the hope that he will earn profits if the company’s stock price goes down.
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`When he takes a short position, he commonly announces it publicly and then proceeds to levy
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`attacks and criticism on his target company and its management, in the transparent hope that the
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`negative publicity will cause the stock price to drop and benefit his position.
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`3.
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`Cohodes, who has an apparent flair for self-promotion—especially on social
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`media—has also curated a cult-like fanbase that views him as an all-knowing sleuth with an eye
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`1
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`
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF MONTANA
`BUTTE DIVISION
`
`HOLBROOK HOLDINGS, INC.,
`
`v.
`
`MARC COHODES,
`
`Plaintiff,
`
`Defendant.
`
`Civil Action No. CV-24-175-BU-JTJ
`
`JURY TRIAL DEMANDED
`
`Plaintiff Holbrook Holdings, Inc., for its complaint against Defendant Marc Cohodes,
`
`COMPLAINT
`
`alleges as follows:
`
`NATURE OF THE ACTION
`
`1.
`
`Plaintiff Holbrook Holdings, Inc., an award-winning financial advisory firm with a
`
`well-earned reputation for conducting itself with honesty, transparency, and the highest ethical
`
`standards, brings this defamation action against short seller Marc Cohodes to hold Cohodes
`
`responsible for a relentless, unhinged, and vindictive smear campaign that he has waged against
`
`Holbrook over the past year.
`
`2.
`
`As a short seller, Cohodes essentially bets against the stock prices of companies
`
`that he shorts, with the hope that he will earn profits if the company’s stock price goes down.
`
`When he takes a short position, he commonly announces it publicly and then proceeds to levy
`
`attacks and criticism on his target company and its management, in the transparent hope that the
`
`negative publicity will cause the stock price to drop and benefit his position.
`
`3.
`
`Cohodes, who has an apparent flair for self-promotion—especially on social
`
`media—has also curated a cult-like fanbase that views him as an all-knowing sleuth with an eye
`
`1
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`Case 2:24-cv-00175-JTJ Document 1 Filed 11/08/24 Page 2 of 24
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`for identifying companies that are engaging in fraudulent or illegal activity, or otherwise “cooking
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`the books.” Thus, when he takes a short position and begins targeting a company, he commonly
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`claims to have determined that the company is corrupt and run by criminals.
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`4.
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`As Holbrook would learn the hard way, Cohodes also has a well-earned reputation
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`for being abrasive, belligerent, and highly sensitive to any criticism—especially of his checkered
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`investment track record.
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`5.
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`In the fall of last year, Cohodes announced on X (formerly Twitter) that he had a
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`short position in the stock of an investment bank called B. Riley, which is publicly traded on the
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`NASDAQ. As is his consistent pattern, Cohodes then began publicly accusing B. Riley and its
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`management of corruption and fraud.
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`6.
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`One of Holbrook’s two mutual funds happens to hold some B. Riley corporate
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`bonds among its hundreds of positions. Holbrook does not otherwise have any relationship with
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`B. Riley.
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`7.
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`In the midst of Cohodes’s attacks on B. Riley, one of Holbrook’s principals took
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`umbrage at what looked to be a very transparent effort by Cohodes to gin up negative publicity
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`about B. Riley, drive down its stock price, and monetize his short position. The Holbrook X
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`account published a short, factual tweet that was mildly critical of Cohodes’s conduct and track
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`record.
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`8.
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`The Holbrook account actually deleted the tweet fairly quickly—not because it was
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`unfair or inaccurate in any way, but because Cohodes’s online army of zealous supporters began
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`inundating Holbrook with abuse for daring to question their leader Cohodes. Unfortunately for
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`Holbrook, Cohodes also saw the tweet before it was deleted. And he was not happy about having
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`his motives or track record questioned, to put it mildly.
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`Case 2:24-cv-00175-JTJ Document 1 Filed 11/08/24 Page 3 of 24
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`9.
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`The same day, Cohodes turned his social media wrath on Holbrook, tweeting about
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`the company at least eighteen times that day, and leveling childish insults like calling Holbrook’s
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`CEO an “asshat” and calling Holbrook’s mutual fund a “bag of shit.”
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`10.
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`If Cohodes had satiated his vindictive impulses with sophomoric insults alone, that
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`likely would have been the end of the matter.
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`11.
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`But Cohodes did not stop there. Instead, he began repeatedly tweeting accusations
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`to his followers that Holbrook and its principals were engaged in securities fraud and an unlawful
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`“kickback” scheme with B. Riley. Cohodes repeated similar allegations on social media over the
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`course of nearly a year.
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`12.
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`Although presented as facts, those accusations have absolutely no basis in reality,
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`and Cohodes knew it at the time he published them. Cohodes simply fabricated outrageous and
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`inherently damaging allegations out of whole cloth in order to punish Holbrook for having the
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`temerity to question him.
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`13.
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`And yet, the matter still would have likely ended there if Cohodes simply did the
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`responsible thing and acknowledged that the defamatory claims he made about Holbrook were not
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`true. Holbrook gave him that chance, and Cohodes instead responded defiantly, essentially
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`bragging about how he had managed to convince his acolytes that Holbrook was guilty of
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`“corruption” and “malfeasance.”
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`14.
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`Left with no other choice, Holbrook brings this defamation suit to hold Cohodes
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`accountable for his actions and to hold him liable for the harm that he has caused to Holbrook’s
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`business and reputation through the intentional and malicious dissemination of defamatory
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`falsehoods.
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`3
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`Case 2:24-cv-00175-JTJ Document 1 Filed 11/08/24 Page 4 of 24
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`PARTIES
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`15.
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`Plaintiff Holbrook Holdings, Inc. is a financial advisory firm that is incorporated in
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`Oregon and has its principal place of business in Atlanta, Georgia.
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`16.
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`Defendant Marc Cohodes is a well-known short seller. He is a citizen of the State
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`of Montana and resides in Bozeman, Montana.
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`JURISDICTION & VENUE
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`17.
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`This Court has subject matter jurisdiction over this action pursuant to 28 U.S.C
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`§1332 because there is complete diversity of citizenship among the parties, and the amount in
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`controversy exceeds $75,000.00, excluding interest.
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`18.
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`This Court has personal jurisdiction over Defendant Marc Cohodes because he is a
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`citizen of the State of Montana and resides in Bozeman, Montana.
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`19.
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`Venue is proper in this District because Defendant resides in this District,
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`Defendant is subject to personal jurisdiction in this District, and because a substantial part of the
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`events or omissions giving rise to Plaintiff’s claims occurred in this District.
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`FACTUAL ALLEGATIONS
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`Holbrook Experiences Rapid Growth While Staying True to Its Founding Principles
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`20.
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`Holbrook is the brainchild of its Founder, Chief Executive Officer, and Portfolio
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`Manager Scott Carmack. After graduating from Harvard University with honors in 2001, Carmack
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`began his career in financial advisory and investment services at JP Morgan in New York City.
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`Carmack founded Holbrook in December 2015, originally working out of the attic of his Portland,
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`Oregon residence.
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`21.
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`The company was founded with a goal of providing potential high risk-adjusted
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`returns for clients utilizing an empirical approach that provides clients with proprietary research
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`and
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`in-depth market commentary, while maintaining
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`impeccable
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`transparency, open
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`Case 2:24-cv-00175-JTJ Document 1 Filed 11/08/24 Page 5 of 24
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`communication, and the highest ethical standards.
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`22.
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`Holbrook launched its first mutual fund, the Holbrook Income Fund, in July 2016.
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`The Holbrook Income Fund was originally funded personally by Carmack and his partner,
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`Holbrook Chief Operating Officer Mike Burns. In 2022, Holbrook launched a second fund, the
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`Holbrook Structured Income Fund.
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`23.
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`At its inception, Holbrook had only about $30,000 in Assets Under Management
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`(AUM), a measure of the market value of the investments managed on behalf of clients. By
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`February 2023, Holbrook had eclipsed $1 billion in AUM.
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`24.
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`Both the Holbrook Income Fund and the Holbrook Structured Income Fund are
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`today managed by Carmack, along with Holbrook Portfolio Manager Ethan Lai, who has had a
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`long career in investment services, including stints as an investment analyst for SunTrust and
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`Goldman Sachs.
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`25.
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`The Holbrook Income Fund boasts a five-star rating from Morningstar, and just last
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`year Refinitiv Lipper recognized it as the best flexible income fund in the U.S. for both its three-
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`year and five-year performance.
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`26.
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`In keeping with its mission statement, Holbrook has maintained an impeccable
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`track record of ethical standards and transparency. Since its inception, neither Holbrook nor any
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`of its “advisory affiliates”—a defined term that includes all officers, directors, and non-clerical
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`employees—has ever been found to have violated any SEC, CFTC, or other federal agency
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`regulations or statutes. Nor has Holbrook or any of its advisory affiliates ever been the subject of
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`a disciplinary order by the SEC, the CFTC, or any state regulatory agency.
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`5
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`Case 2:24-cv-00175-JTJ Document 1 Filed 11/08/24 Page 6 of 24
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`Defendant Marc Cohodes Develops a Reputation for Pugnacity
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`Defendant Marc Cohodes is a well-known short seller. As opposed to investors
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`27.
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`who typically take “long” positions expecting to profit when the value of a stock or another security
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`increases over time, in the context of stock, short sellers essentially bet against companies and
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`hope to profit if the value of the stock goes down. The practice typically involves borrowing stock,
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`selling it on the open market, and then hopefully repurchasing the stock at a lower price after the
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`value decreases.
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`28.
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`The nature of a short position means that while a fall in the value of the shorted
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`stock can result in profits for the short seller, if the bet fails and the stock value increases, this can
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`result in steep losses. Thus, short sellers have a very strong financial interest in seeing that the
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`companies they have bet against fail.
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`29.
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`In the 1980’s, Cohodes joined a New Jersey hedge fund that was then called Rocker
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`Partners. The firm focused primarily on short selling, and Cohodes became its General Partner.
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`30.
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`In 2001, Rocker Partners was accused in a civil suit of conspiring with the financial
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`publication TheStreet.com to plant a series of negative stories about a company that Rocker
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`Partners was short on. It turned out that Rocker Partners owned a large, undisclosed stake in
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`TheStreet.com at the same time that TheStreet.com was publishing stories that would benefit
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`Rocker Partners’ short position.
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`31.
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`In 2005, Cohodes and Rocker Partners were again accused of attempting to
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`manipulate the market to profit from a short position in the stock of online retailer Overstock.com.
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`Overstock alleged that Cohodes and Rocker Partners colluded with a supposed “independent”
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`research group to publish a series of reports that were uniformly negative about Overstock and
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`which were intended to drive Overstock’s stock price down and thus secretly benefit Rocker
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`6
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`Case 2:24-cv-00175-JTJ Document 1 Filed 11/08/24 Page 7 of 24
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`Partners. While Cohodes and Rocker Partners denied any wrongdoing, they ultimately paid
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`millions of dollars to settle the lawsuit.
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`32.
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`In 2006, after his partner retired, Cohodes took over sole control of the venture,
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`which he rechristened Copper River Partners.
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`33.
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`However, not long after Cohodes assumed full control of Copper River, the firm
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`met its demise in spectacular fashion during the financial crisis of 2008. Although stock prices
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`were generally plunging during the crisis, which in theory should have been a boon for short
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`sellers, the stocks that Cohodes and Copper River chose to short saw large gains, not losses. That
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`year, the fund faced losses of over 50%, and Cohodes was forced to shutter Copper River for good.
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`Cohodes claimed that the spectacular failure of Copper River was the result of behind-the-scenes
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`intrigue that he blamed on Goldman Sachs.
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`34. With his hedge fund and his reputation in tatters, Cohodes retreated to a 20-acre
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`property in Sonoma wine country, told a reporter that he would “never” be in the short selling
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`business again, and stated that the experience of his firm going belly up only served to convince
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`him “how despicable people are.”
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`35.
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`After spending years in proverbial exile, Cohodes resurfaced in 2017 and sought to
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`make a comeback and reestablish his public image as a famed short seller. But this time, there
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`would be no hedge fund—he would go it solo and use his own money to finance his shorts.
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`36.
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`Cohodes cultivated a brash, tough-talking, aggressive image. He also began to
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`market himself as an expert in sniffing out fraud and scam businesses. Thus, rather than simply
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`predicting that a given company might see a decline in stock value due to macro market factors,
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`changing trends, or unfortunate business decisions, Cohodes’s new modus operandi was to
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`Case 2:24-cv-00175-JTJ Document 1 Filed 11/08/24 Page 8 of 24
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`aggressively and publicly proclaim that the companies he singled out for short bets were outright
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`frauds and run by criminals.
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`37.
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`His reputation in that regard was greatly burnished in 2022, when he was an early
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`skeptic of Sam Bankman-Fried, his cryptocurrency exchange and hedge fund FTX, and banks like
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`Silvergate and Signature that catered to the crypto industry.
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`38.
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`Cohodes has also used Twitter (now X) to promote himself to great effect. He
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`developed a dedicated army of followers who see him as a master sleuth and a bulwark against
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`corporate executives who do not play by the rules. Today, his X account has nearly 200,000
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`followers.
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`39.
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`Cohodes’s hyper-aggressive social media persona is decidedly not an act. The real
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`Marc Cohodes is indeed aggressive, brash, and, above all, hyper-sensitive to even the slightest
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`criticism or questioning of his financial acumen. The tales of Cohodes’s obsession with petty
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`grievances are legion.
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`40.
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`Even relatively fawning profiles in the financial press have described him as
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`“relentlessly self-promoting,” “nasty, prickly,” “irascible,” prone to being in a “foul mood,” and
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`an “intentionally profane growling bear.”
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`41.
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`A full decade after the 2008 financial crisis that saw his hedge fund Copper River
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`implode, Cohodes told a reporter for Financial News that even then, if he saw former Morgan
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`Stanley CEO John Mack—who had generically criticized short sellers’ role in causing the 2008
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`market crisis—in a crosswalk, Cohodes would “run him over.”
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`42.
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`Some former associates and partners—like his former partner at Rocker Partners—
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`refuse to even speak with him. One former business associate described him as “one of the most
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`Case 2:24-cv-00175-JTJ Document 1 Filed 11/08/24 Page 9 of 24
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`stubborn, grudge-holding, toxic people I have ever met,” and noted that he “will NEVER admit he
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`is wrong and he holds grudges years later.”
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`43.
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`In 2020, Cohodes and his then-wife purchased an 84-acre property in Gallatin
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`County, Montana from a multi-generational ranching family. There was a public river access near
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`the home that local hunters and anglers had used for decades. Shortly after buying the property,
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`the Cohodeses began inundating the Sheriff’s Office and county officials with calls and emails
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`demanding that people legally accessing the river be arrested for trespassing and claiming that
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`those using the area to recreate were “druggies.” They built fencing and hung no trespassing signs,
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`and even filed for a restraining order against an elderly man who would park on the public road
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`near their home so that he could enjoy the morning sunrise.
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`44.
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`In August 2023, Cohodes was interviewed on X Spaces by Edwin Dorsey, founder
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`of the investing newsletter the Bear Cave. Dorsey began what was clearly intended as a flattering
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`and friendly interview by describing himself as a “fan” of Cohodes, whom he considered a
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`“mentor.” But when Dorsey then dared to gently ask Cohodes about critics of some of his
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`investments that did not pan out, Cohodes flew into a rage, cursed at, and threatened the
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`interviewer, called the interviewer (and other perceived critics) “f***ing sociopaths,” and claimed
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`that those who dare criticize him are just “jealous of what I’ve done and who I am.”
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`45.
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`In response to a question about retail investors who lost money investing in AMC
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`based on Cohodes’s advice, Cohodes stated that he himself had lost one million dollars but that he
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`didn’t care because “I piss a million dollars.” Cohodes concluded his rant by telling his interviewer
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`to “use your Stanford education” and stop asking about “bullshit,” and exclaiming, “I don’t need
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`you disrespecting me. Am I f***ing clear?”
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`Case 2:24-cv-00175-JTJ Document 1 Filed 11/08/24 Page 10 of 24
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`46.
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`By the end of the interview, Cohodes was still steaming about the seemingly
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`softball question his friend had asked him. He concluded the discussion by telling his interviewer,
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`“you should go f*** yourself, and look in the mirror and say ‘what the f*** am I doing,’ because
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`if it wasn’t for me, no one would know who the f*** you are.”
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`47.
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` When Cohodes’s natural penchant for flinging grotesque insults and accusations
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`intersects with his own financial interest as a short seller, the ensuing results are predictably toxic.
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`48.
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`For example, in 2018, Cohodes had a short position in the stock of generic
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`drugmaker Lannett. Cohodes decided to pick a public fight with high-frequency trader Guy
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`Gentile, who was a long investor in Lannett and had publicly touted the company. Cohodes’s
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`numerous social media attacks on Gentile included calling him a “greaseball,” “asshat,” and
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`claiming that Gentile is a “wife beater” who “belongs behind bars.”
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`Enraged by Holbrook’s Mild Criticism, Cohodes Responds with Defamatory Attacks
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`49.
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`At any given time, the Holbrook Income Fund has approximately two-hundred
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`different holdings. The largest, by percentage of allocation, are U.S. government bonds.
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`50.
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`The Holbrook Income Fund also invests in corporate bonds. Among the numerous
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`corporate bonds in the fund’s portfolio are those of a financial services company and investment
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`bank called B. Riley. B. Riley is a public company, and its stock is traded on the NASDAQ
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`exchange under the ticker symbol “RILY.”
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`51.
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`Sometime in the late summer or early fall of 2023, Cohodes took a short position
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`in B. Riley stock. Consistent with his standard playbook, Cohodes then began tweeting negatively
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`about B. Riley in earnest, with the apparent motive of driving its stock price down so that he could
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`profit from his short.
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`52.
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`Also consistent with his playbook, Cohodes proclaimed to his many thousands of
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`followers on X that he was targeting B. Riley not merely because he thought its future business
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`prospects were dim, but because the investment bank was, supposedly, an outright fraud and scam.
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`53.
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`The purported basis for this claim is tenuous and convoluted. In early November
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`2023, it was announced that John Hughes, the co-founder of a company called Prophecy Asset
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`Management, had pled guilty to federal charges of conspiracy to commit securities fraud. The
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`plea deal between Hughes and the Department of Justice also made reference to a “Conspirator
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`#2,” who was not indicted, but who the government believed had participated in Hughes’s
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`unlawful scheme. That individual was identified in media reports as Brian Kahn, the CEO of
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`Franchise Resource Group. Kahn, in turn, had done business with B. Riley in the past. Even
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`though there was no allegation from the government that B. Riley had anything whatsoever to do
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`with Hughes or his unlawful activities, Cohodes seized on the indictment and repeatedly labeled
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`B. Riley a fraud and a scam based only on the notion that it had a relationship with someone who
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`had a relationship with someone who had been indicted.
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`54.
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`Beginning on November 6, 2023, Cohodes began tweeting about B. Riley almost
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`nonstop, oftentimes tweeting multiple times in a single day, with the consistent theme being that
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`B. Riley is a fraudulent enterprise run by criminals:
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`Case 2:24-cv-00175-JTJ Document 1 Filed 11/08/24 Page 12 of 24
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`In December 2023, frustrated by Cohodes’s concerted efforts to drive down
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`55.
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`B. Riley’s stock price for profit, Holbrook CEO Scott Carmack stepped into the fray and published
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`a tweet on Holbrook’s X account that was mildly critical of Cohodes’s conduct. The tweet stated,
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`in sum and substance, that Cohodes’s claim to be a defender of shareholders against greedy
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`corporate management was somewhat ironic in light of the fact that Cohodes built his wealth as a
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`hedge fund manager and then shuttered his fund, Copper River, leading to huge losses for his
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`investors.
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`56.
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`Carmack ended up taking down the tweet within 48 hours because he was
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`immediately inundated with abusive messages from Cohodes’s army of supporters.
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`57.
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`Unfortunately for Carmack and Holbrook, the “profane growling bear” had already
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`been poked, and this single, innocent, and factual tweet would trigger a seemingly endless wave
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`of vindictive retaliation from Cohodes.
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`58.
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` The avalanche began on the morning of December 17, 2023, when Cohodes
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`12
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`Case 2:24-cv-00175-JTJ Document 1 Filed 11/08/24 Page 13 of 24
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`published the first of at least 18 separate tweets that day attacking Holbrook. He began by
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`repeatedly referring to Holbrook—which he apparently believed, erroneously, to be the name of
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`the individual in charge of the company—as an “asshat.”
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`He would repeat the “asshat” insult multiple times that day, along with referring to
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`59.
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`Holbrook’s Income Fund (HOBIX) as a “bag of Shit.”
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`Case 2:24-cv-00175-JTJ Document 1 Filed 11/08/24 Page 14 of 24
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`His vindictive desires not satiated by sophomoric insults alone, Cohodes quickly
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`60.
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`pivoted to accusing Holbrook and its leadership of breaching fiduciary duties to investors and
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`engaging in securities fraud.
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`61.
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`These accusations began during Cohodes’s December 17, 2023 tweet storm when
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`Cohodes claimed to his followers that Holbrook was violating SEC regulations by holding “non
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`Investment Grade Securities.”
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`That allegation, and the suggestion that Holbrook’s investment in B. Riley bonds
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`62.
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`would in any way run afoul of SEC rules, is completely false. Holbrook’s holding of B. Riley
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`bonds in its mutual funds is not unlawful or improper in any respect, and the holdings are fully
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`consistent with the statements in the prospectus for each of Holbrook’s mutual funds, both of which
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`are publicly available on Holbrook’s website. Any investor with Cohodes’s experience would
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`know these allegations were untrue.
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`63.
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`Cohodes followed up that tweet with another, less than an hour later, in which he
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`labelled Holbrook a “scam outfit.”
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`64.
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`Just five days later, on December 22, 2023, Cohodes unveiled a new line of attack,
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`claiming that Holbrook’s investment in B. Riley bonds was part of an unlawful quid pro quo.
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`Specifically, Cohodes claimed that Holbrook invested in B. Riley in exchange for its founder,
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`Bryant Riley, agreeing to “tout” Holbrook’s mutual funds to Riley’s wealthy clients.
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`65. What Cohodes baselessly accused Holbrook of is serious business. It is a violation
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`of federal securities laws for an investment advisor to steer a client to invest in a particular security
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`while failing to disclose to the client that the advisor is receiving a “kickback,” in the form of cash
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`or any other benefit, for inducing clients to invest in that security. In no uncertain terms, Cohodes
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`thus conveyed to his followers that Holbrook had engaged in securities fraud.
`
`66.
`
`That accusation is completely false. Aside from having invested in B. Riley’s
`
`corporate bonds, Holbrook has no relationship with B. Riley. It has no selling agreement with
`
`
`
`15
`
`
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`Case 2:24-cv-00175-JTJ Document 1 Filed 11/08/24 Page 16 of 24
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`B. Riley that would allow B. Riley’s financial advisors to recommend or sell Holbrook’s mutual
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`funds to B. Riley’s clients, and neither Holbrook nor its principals have ever received any form of
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`kickback or other compensation from B. Riley, related to Holbrook’s investments or otherwise.
`
`67.
`
`68.
`
`That was far from the only time Cohodes would lob fraud allegations at Holbrook.
`
`On February 29, 2024, Cohodes posted yet another tweet about Holbrook being
`
`invested in B. Riley shares. After a couple of his followers chimed in on the thread and continued
`
`discussing Holbrook, Cohodes directly claimed that Holbrook was “in” on a supposed fraudulent
`
`scheme with B. Riley, and again claimed that there was a kickback scheme in place.
`
`
`Lest there should be any doubt that Cohodes was directly accusing Holbrook of
`
`69.
`
`illegality, he followed up the “fraud” tweet with another a couple weeks later, in which he claimed
`
`that Holbrook would soon “get exposed for what they are doing” with B. Riley. Cohodes
`
`emphasized the point by tagging the X handles of the SEC, the federal agency responsible for
`
`enforcement of federal securities laws, and FINRA, which regulates brokerage firms and exchange
`
`markets.
`
`70.
`
`Again, these accusations are completely false. Holbrook has not engaged in any
`
`kind of fraudulent conduct. It is not aware of any fraudulent conduct by B. Riley either, and it
`
`certainly is not “in” on any fraudulent scheme of any kind.
`
`71.
`
`By August 2024—nearly a year after Holbrook had drawn Cohodes’s ire due to a
`
`
`
`16
`
`
`
`Case 2:24-cv-00175-JTJ Document 1 Filed 11/08/24 Page 17 of 24
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`single, quickly deleted tweet—Cohodes was still at it. On August 12, 2024, he published a tweet
`
`calling Holbrook a “financial charade.”
`
`
`The very next day, he doubled down on his previous claim that Holbrook and
`
`72.
`
`B. Riley were engaged in an unlawful “kickback” scheme, this time telling his followers that he
`
`was “sure” that was the case.
`
`
`
`17
`
`
`
`Case 2:24-cv-00175-JTJ Document 1 Filed 11/08/24 Page 18 of 24
`
`
`Again, the accusation that there is any kind of kickback agreement between
`
`73.
`
`Holbrook and B. Riley is absolutely false.
`
`Holbrook Asks Cohodes to Act Responsibly, and Instead He Doubles Down
`
`On September 16, 2024, counsel for Holbrook sent Cohodes a letter demanding a
`
`74.
`
`retraction of his false accusations about the company, including the claims that Holbrook’s
`
`investment strategy violated SEC rules, that Holbrook had engaged in a kickback scheme with
`
`B. Riley, and that Holbrook was involved in any fraudulent conduct with regard to B. Riley.
`
`75.
`
`Holbrook did not make any financial demand. It simply asked that Cohodes agree
`
`to delete his tweets and acknowledge the obvious falsity of those accusations.
`
`76.
`
`In keeping with his apparent inability to accept criticism or acknowledge his
`
`mistakes, Cohodes instead doubled down in his attorney’s response to Holbrook’s retraction
`
`demand.
`
`77.
`
`In doing so, he confirmed, proudly and boldly, that his tweets were not meant to
`
`convey that Holbrook was merely “incompetent” or “stupid.” Instead, Cohodes fully
`
`
`
`18
`
`
`
`Case 2:24-cv-00175-JTJ Document 1 Filed 11/08/24 Page 19 of 24
`
`acknowledged that he intended to convey to his followers and readers that Holbrook was “corrupt”
`
`and guilty of “malfeasance.”
`
`78.
`
`On October 8, 2024, Cohodes appeared as a guest for an interview with the
`
`“Hedgeye Investing Summit,” during which he again bragged about his attacks on Holbrook.
`
`Tacitly acknowledging that his repeated claims of Holbrook being involved in securities fraud
`
`were completely fabricated, Cohodes admitted, “I don’t even know who Holbrook is or what they
`
`do.” But, he said, since Holbrook dared to “pick a fight” with him, then his intention is to “end
`
`the fight” and “skate them into the concrete.”
`
`Holbrook Brings This Action to Hold Cohodes Accountable for
`Vindictively and Deliberately Spreading Falsehoods
`
`79.
`
`As set forth above, Cohodes intentionally and knowingly published to his many
`
`thousands of followers fabricated claims that Holbrook is involved in securities fraud. He did so
`
`not because he actually believed this to be the case—there is no factual basis by which Cohodes
`
`could draw such a conclusion—but because he was enraged that Holbrook dared to criticize his
`
`conduct toward B. Riley.
`
`80.
`
`These actions have caused, and continue to cause, enormous harm to Holbrook and
`
`its business and reputation. Holbrook conservatively estimates that Cohodes’s actions have caused
`
`it to suffer at least $5 million in reputational harm.
`
`81.
`
`In addition to reputational harm, Holbrook has suffered economic damages as a
`
`result of Cohodes’s false and defamatory statements. Despite Holbrook’s continued excellent
`
`performance—among peer funds, the Income Fund is in the top two percentile year-to-date, top
`
`three percentile over the last three years, top one percentile over the last five years, and top one
`
`percentile since inception—Cohodes’s defamatory statements have caused a demonstrable
`
`slowing of the trend growth in Holbrook’s AUM, which in turn equates to less revenue for
`
`
`
`19
`
`
`
`Case 2:24-cv-00175-JTJ Document 1 Filed 11/08/24 Page 20 of 24
`
`Holbrook. The loss of revenue attributable to Cohodes’s false statements to date is nearly
`
`$5 million.
`
`82.
`
`Cohodes’s false and defamatory statements have also caused at least $4 million in
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`damage to Holbrook’s enterprise value.
`
`83.
`
`Cohodes’s egregious and vindictive behavior toward Holbrook is far outside the
`
`bounds of responsible public discourse. At this point, Holbrook has unfortunately concluded that
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`Cohodes will not stop this course of conduct unless he is held accountable for his actions.
`
`FIRST CLAIM FOR RELIEF
`
`LIBEL PER SE FOR STATEMENTS IN THE DECEMBER 17, 2023 X POST
`
`84.
`
`Holbrook repeats, realleges, and incorporates the above paragraphs as though fully
`
`set forth herein.
`
`85.
`
`On December 17, 2023, Cohodes published a post on his personal account
`
`(“@AlderLaneEggs”) on the social media site X.com (formerly Twitter).
`
`86.
`
`The post stated, referring to Holbrook: “He also has a problem with $BW I think I
`
`will write a letter about @HolbrookHldgs to the @SECGov about hold non Investment Grade
`
`Securities.. I also wonder if the $RILY clients own his Shit Ass Mutual Fund.. Friends dont Let
`
`Friends own $HOBIX. .. Good to see another $RILY victim on TILT on a Sunday
`
`@FriendlyBearSA @AureliusValue @joe_bananas9 .. I wonder if this guy is one of Parker Petite’s
`
`illegit kids?”
`
`87.
`
`The post was published to a worldwide audience on X’s platform. It remains
`
`available online at the URL: https://x.com/AlderLaneEggs/status/1736499333024071942. A copy
`
`of the post as it appears on X.com is attached hereto as Exhibit A.
`
`88.
`
`The December 17, 2023 X post is of and concerning Holbrook.
`
`
`
`20
`
`
`
`Case 2:24-cv-00175-JTJ Document 1 Filed 11/08/24 Page 21 of 24
`
`89.
`
`The December 17, 2023 X post was intended to convey, and was understood by
`
`readers as conveying, the factual accusation that Holbrook’s holding of B. Riley bonds in its
`
`mutual funds was improper and in violation of SEC rules.
`
`90.
`
`91.
`
`The December 17, 2023 X post is false and defamatory.
`
`The December 17, 2023 X post is libelous per se in that it exposes Holbrook to
`
`contempt, ridicule, and obloquy, tends to affect Holbrook in its trade and business, and accuses
`
`Holbrook of engaging in unlawful conduct.
`
`92.
`
`By publication of the December 17, 2023 X post, Cohodes caused harm to
`
`Holbrook’s reputation.
`
`93.
`
`Cohodes published the December 17, 2023 X post with a reckless disregard for the
`
`truth, in that he was aware at the time of publication that the statement was false or, at a minimum,
`
`had a high degree of awareness that the statement was probably false.
`
`94.
`
`As a direct and proximate result of the publication of the false and defamatory
`
`December 17, 2023 X post, Holbrook has suffered damages, including injury to reputation and
`
`economic damages, in an amount to be determined at trial.
`
`SECOND CLAIM FOR RELIEF
`
`LIBEL PER SE FOR STATEMENTS IN THE FEBRUARY 29, 2024 X POST
`
`95.
`
`Holbrook repeats, realleges, and incorporates the above paragraphs as though fully
`
`set forth herein.
`
`96.
`
`On February 29, 2024, Cohodes published a post on his personal account
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