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Eagle Bancorp slams short seller for 'deceptive' report

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Eagle Bancorp slams short seller for 'deceptive' report

Eagle Bancorp Inc. branded as "deceptive and materially misleading" Aurelius Value's piece alleging, among other things, that the Bethesda, Md.-based company has been engaged in an insider loan scheme involving its CEO and some directors.

Aurelius Value, a short seller, claims that Eagle Chairman and CEO Ronald Paul used his own company to issue large preferential loans in exchange for cheap equity stakes in Eagle borrowers, citing undisclosed fraud suits filed by founders of two businesses co-owned by Paul.

In a press release, Eagle said the only credit that it issued to the identified executive was a line of credit in case of an overdraft, adding that the line never was used and has not been funded.

"Contrary to the misrepresentations by Aurelius, the loans identified in the piece were not made to the identified executive," Eagle said. "[I]t appears that the goal of this piece was to manipulate and depress Eagle's stock price."

Eagle's shares plunged 24.49% to $49.95 on Dec. 1.