XP Inc. (XP) Faces Scrutiny After Short Seller Alleges Company Operates A “Madoff-like” Ponzi Scheme – Hagens Berman

Core Viewpoint - XP Inc. is facing serious allegations of operating a Ponzi-like scheme, leading to a significant decline in its share price after a report by Grizzly Research was published [1][3]. Group 1: Allegations and Investigations - A report titled "XP's Entire Profits Are Dependent on What Insiders Call a 'Madoff-Like Ponzi Scheme'" was published by Grizzly Research, causing XP's share price to drop over 5% [1][3]. - Hagens Berman, a prominent investor rights firm, is investigating the allegations and is encouraging affected investors to submit their losses [1][2]. - The investigation is focused on the accuracy of XP's statements regarding its business model and its internal financial controls [2][3]. Group 2: Details of the Allegations - The report claims that XP is running a massive Ponzi scheme through certain derivatives sales to retail clients, misrepresented as proprietary trading profits [7]. - A specific fund, GLADIUS FIM CP IE, reportedly returned over 2,419% over five years with low volatility, raising questions about its legitimacy [7]. - The profitability of XP is allegedly dependent on the sales of a product called COE (Certificado de Operações Estruturadas), which is aggressively marketed to Brazilian retail clients [7]. - Former employees indicated that the scheme relies on continuous inflows of COEs, and a halt in sales could lead to significant liabilities for XP [7].