The FBI raided the office of United Development Funding IV, a Texas-based real estate investment trust (REIT), according to people familiar with the matter.
The stock fell more than 54% and was last trading around $3.20 per share.
NBC Dallas-Fort Worth reportsthat agents were seen carrying boxes away from the premises.
UDF is the latest short target of Texas hedge fund manager J. Kyle Bass, the founder of Dallas-based Hayman Capital Management.
Earlier this month, Bass launched a website that accuses the company of operating a “Ponzi-like real estate scheme.”
United Development Funding IV responded in statement that same day saying Bass’ website contains “multiple false and misleading statements.”