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Federal prosecutors on Friday charged prominent short seller Andrew Left with fraud, accusing him of using his vast following to manipulate the stock market. Stock Market And he made at least $16 million in illegal profits.
of Securities and Exchange Commission It also filed charges against Left and his company, Citron Capital, accusing them of “operating a multi-year, $20 million scheme to defraud his followers by making false and misleading statements about his stock trading recommendations.”
Authorities allege that Left used his Citron Research website and social media platforms to recommend long or short positions in the stocks of 23 companies and told his followers that the positions matched his own. Following Left’s recommendations, the stock prices of the stocks moved an average of more than 12%, according to the indictment.
According to the SEC, when stock prices moved after he made his recommendations, Left and Citron Capital quickly reversed their positions to take advantage of the changes.
Andrew Left, founder of Citron Research, speaks at the Reuters Global Investment 2019 Outlook Summit in New York on November 12, 2018. (REUTERS/Brendan McDiarmid/REUTERS)
“Andrew Left misled his readers,” said Kate Zoladz, director of the SEC’s Los Angeles office. “He built up their trust, misled them into trading under false pretenses, and then quickly reversed course to capitalize on price movements that followed his reports.”
Left, 54, declined to comment on the allegations.
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For more than a decade, Left has been one of the most prominent “activist short sellers” who invest in public companies they believe to be overvalued or fraudulent. He has published investigations into companies such as GameStop, Peloton, Tesla and the now-bankrupt China-based Evergrande.
| Ticker | safety | last | change | change % |
|---|---|---|---|---|
| global | GameStop Corp. | 23.95 | -0.06 |
-0.25% |
| TSLA | Tesla Inc. | 220.25 | +4.26 |
+1.97% |
| P-ton | Peloton Interactive, Inc. | 3.54 | +0.09 |
+2.46% |
Citron Research owner and founder Andrew Left poses for a photo after a television interview in Los Angeles, California on October 22, 2015. (Patrick T. Fallon/Bloomberg via Getty Images/Getty Images)
Criminal prosecutors in Washington and Los Angeles and SEC investigators have been investigating short sellers for years for alleged market manipulation.
“In order to maintain his false representation that he endorsed Citron’s recommendations and positions in good faith, Defendant Left made false and misleading representations and half-truthful statements about his financial motivations, his belief in Citron’s analysis, and his valuation of the target securities,” the Justice Department said.
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He is scheduled to be arraigned in U.S. District Court in downtown Los Angeles in the coming weeks.
According to the Department of Justice, if convicted, Left faces up to 25 years in prison for the securities fraud scheme charge, up to 20 years in prison for each securities fraud count and up to five years in prison for each false statement count.
Reuters contributed to this report.
