Prominent activist short seller and market analyst Andrew Left has been criminally charged by federal prosecutors with multiple counts of securities fraud.
If convicted, Mr. Left, 54, could face a maximum sentence of 25 years in prison for the scheme.
Short-selling is a widely used and highly risky strategy used by traders to bet against a stock they view as overvalued. Well-known short sellers can create a frenzy in the financial markets by presenting bearish research findings about a particular stock.
Online investment newsletter Citron Research has been described as an independent financial market research firm that did not receive compensation from third parties. But California federal prosecutors claim that Mr. Left misused the platform to participate in compensation arrangements with various organizations, including hedge funds, and “exploited his ability to move stock prices” by utilizing his social media influence to enhance and exaggerate market reactions.
Prosecutors further allege that Mr. Left misused his Citron Research platform between 2018 and 2023 “relating to 23 target companies on at least 26 separate occasions which allowed him to generate approximately $20 million in illegal trading profits through a scheme to defraud” by claiming that their stocks were either valued too high or too low by the market.
“In other words, Left bought back the stock almost immediately after telling his readers to sell, and Left sold stock almost immediately after telling his readers to buy,” the indictment stated. “This fraudulent practice deceived investors and allowed Left to use his Citron Research reports and tweets as catalysts from which he could derive short-term profits.”
These targeted firms included American Airlines, General Electric, IGC, Roku, and Namaste Technologies.
In one listed example of Mr. Left’s alleged actions, a firm contacted the defendant about putting together a short recommendation on Namaste, and he responded, “DONE...let me kill it,” adding that “these retail holders are nervous. We will hit them.”
“Left bragged to colleagues that some of these statements [he made] were especially effective at inducing retail investors to trade based on his recommendations and said that it was like taking ‘candy from a baby,’” the indictment stated.
Akil Davis, the assistant director in charge of the FBI’s Los Angeles Field Office, alluded to Mr. Left’s regular appearances on CNBC and other financial news networks over the years to take advantage of his clout and reputation.
“Andrew Left took advantage of his readers. He built their trust and induced them to trade on false pretenses so that he could quickly reverse direction and profit from the price moves following his reports,” Kate Zoladz, director of the SEC’s Los Angeles Regional Office, said in a statement. “We uncovered these alleged bait-and-switch tactics, which netted Left and his firm $20 million in ill-gotten profits, and we intend to hold Left and his firm accountable for their actions.”
Mr. Left garnered attention this past spring for revealing that he was shorting GameStop again after his failed attempt in 2021 during the meme craze.
In 2015, Mr. Left gained esteem for successfully betting against Valeant Pharmaceuticals. The stock plummeted by 30 percent after Citron Research accused the Canada-based company of engaging in sham transactions.
The Epoch Times reached out to Mr. Left’s attorney for comment but didn’t receive a reply by publication time.
