Investing.com --SoFi Technologies Inc. (NASDAQ: SOFI) shares rose 1% after-hours Tuesday following CEO Anthony Noto's purchase of $500,000 in company stock after the close of trade.

Noto bought 28,900 shares today at an average price of $17.3189, according to a Form 4 filing with the SEC.

The purchase came after short seller Muddy Waters Research announced a short position in the company, sending shares down over 4% intra-day before closing down 1.3%.

Muddy Waters described SoFi as "a financial engineering treadmill, not a healthily growing origination business." The firm alleged that SoFi shareholders face constant dilution so management can achieve bonus targets through loan marks and off-balance-sheet structures that disguise borrowings as revenue.

The short seller claimed SoFi has a material misstatement of at least $312 million of unrecorded debt. Muddy Waters calculated SoFi's Personal Loan charge-off rate at approximately 6.1%, compared to the 2.89% the company reports.

Muddy Waters stated that SoFi's reported EBITDA of $1,054 million is inflated by approximately $950 million through manipulated charge-off rates, subsidized seller-financed sales, unrecorded borrowings, an off-balance-sheet lending structure that books borrowing proceeds as revenue, and capitalized marketing expenses excluded from the headline metric.

The firm said SoFi's Student Loan business appears to exist primarily to generate Fair Value gains for management bonuses. Muddy Waters characterized the Loan Platform Business as a wet-funded forward flow transaction, which it called a disguised form of borrowing whose loan proceeds SoFi books as fee income.

According to Muddy Waters, management has locked in $58 million through instruments economically equivalent to stock sales while publicly claiming not to have sold shares.

Noto's purchase shows a vote of confidence in the stock amid the short seller attack.