Short Seller Andrew Left Is on the Hook for Securities Fraud

Andrew Left and his institution Citron Research are facing a securities fraud suit from nan U.S. Securities and Exchange Commission (SEC) alleging that nan famed short seller profited from misleading comments astir stocks.

The U.S. Department of Justice (DOJ) besides announced a criminal lawsuit against Left connected Friday.

The SEC contends that Left and his institution made "illegal trading profits" of astir $20 cardinal by trading successful a mode contrary to what they told investors.

Like Taking 'Candy From a Baby'

"In different words, Left bought backmost nan banal almost instantly aft telling his readers to sell, and Left sold banal almost instantly aft telling his readers to buy," nan SEC said, noting that nan short seller profited from short-term value swings that resulted from his misleading commentary.

Left and his firm's strategy besides progressive quickly trading aliases buying stocks astatine levels acold different from nan value targets they gave investors who followed their investigation aliases tweets, nan SEC said.

"Left bragged to colleagues that immoderate of these statements were particularly effective astatine inducing unit investors to waste and acquisition based connected his recommendations and said that it was for illustration taking 'candy from a baby,'" nan suit said.

Left Allegedly Engaged connected Fraudulent Trades connected 23 Firms, Including Nvidia

According to nan SEC, betwixt March 2018 and December 2020, Left and his institution engaged successful trades successful 23 companies connected 26 abstracted occasions, including Nvidia (NVDA), Tesla (TSLA), American Airlines (AAL), Facebook (now META), Roku (ROKU), Alibaba (BABA), Twitter (now X and not publically traded), GE, and Palantir (PLTR).

The SEC besides said that Left, via his media appearances, created nan image of a "successful hedge fund" when, successful fact, nan money had nary extracurricular investors, and traded only his money.

The regulator besides alleges that Left received compensation from a hedge money that traded based connected his proposal though nan short seller denied specified an arrangement.

SEC Seeks To Bar Left From Penny Stock Offerings

Apart from seeking nan millions Left generated from his trades, nan SEC is besides seeking that Left beryllium barred from participating successful immoderate penny banal offering. The regulator besides is seeking that Left aliases immoderate entity controlled by him not beryllium allowed to waste and acquisition successful securities for astatine slightest 5 days aft he has made immoderate commentary public.

DOJ Announces Criminal Case Against Left

The Justice Department besides announced a criminal suit against Left for banal marketplace manipulation, alleging he reaped "at slightest $16 million" successful profits.

"Left is charged pinch 1 count of engaging successful a securities fraud scheme, 17 counts of securities fraud, and 1 count of making mendacious statements to national investigators," nan DOJ said. "If convicted, he faces a maximum punishment of 25 years successful situation connected nan securities fraud strategy count, 20 years successful situation connected each securities fraud count, and 5 years successful situation connected nan mendacious statements count."

James Spertus, an lawyer representing Left said that neither agency alleges that accusation Left published was not believed to beryllium existent astatine nan clip of publication. He called nan lawsuit against Left "defective," stating that each of Left's publications contained elaborate disclosures.

"The truth that nan Mr. Left trades successful nan securities he researches and writes astir is good known to everyone, and location is nary norm aliases rule requiring a patient who discloses that he is trading to besides people his backstage trading intentions," Spertus said successful a statement.