Federal Grand Jury Indicts Short Seller Andrew Left in $16 Million Stock Manipulation Case
A federal grand jury in California has indicted short seller Andrew Left on multiple counts of securities fraud in connection with a $16 million stock market manipulation scheme.
The Justice Department said in a statement Friday that Left, who was a securities analyst, trader and guest commentator on television networks including CNBC and Fox Business, is charged with one count of participating in a securities fraud scheme, 17 counts of securities fraud and one count of making false statements to federal investigators. As a short seller, Left allegedly made money by betting that stocks would fall.
The Justice Department said Left operated under the name Citron Research, which had a website that published investment recommendations. It published research on companies ranging from Tesla to GameStop to Grand Canyon education and Peloton.
If convicted, Left faces a maximum sentence of 25 years in prison for the securities fraud count, 20 years in prison for each count of securities fraud and five years in prison for the false statements count.
According to the indictment, Left commented on the actions of publicly traded companies and made stock recommendations. His comments often included sensationalist headlines (“Investors Go on a Frenzy”) and exaggerated language to maximize the stock market’s reaction. As alleged, Left knowingly exploited his ability to drive stock prices by targeting stocks popular with retail investors and posting recommendations on social media to manipulate the market and make quick and easy money.
The indictment further alleges that prior to Citron posting his comment, Left was creating long or short positions in a public company he commented on in his trading accounts and was preparing to quickly close those positions after Citron posted his comment and take profits on the short-term price movement caused by his comment.
Separately, the Securities and Exchange Commission (SEC) announced it is charging Left and Citron Capital with what it says was a $20 million fraud scheme that used “bait and switch” tactics to deceive investors. The SEC’s complaint, filed in the U.S. District Court for the Central District of California, accuses Left and Citron Capital of violating the anti-fraud provisions of the federal securities laws.
“Andrew Left took advantage of his readers, gaining their trust and induced them to trade under false pretenses so he could quickly reverse course and profit from the price movements that followed his reports,” Kate Zoladz, director of the SEC’s Los Angeles regional office, said in a statement.
The complaint seeks restitution, prejudgment interest and civil monetary penalties against Left and Citron, as well as conduct-based injunctions, a director and officer ban and a penny stock ban against Left.
Representatives for Citron Research did not immediately respond to a request for comment. According to the complaints, Left moved from Beverly Hills, California, to Boca Raton, Florida.
