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 channels including CNBC and Fox Business, has been 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 did business as Citron Research, which ran a website that published investment recommendations. He published research on companies ranging from Tesla and GameStop to Grand Canyon Education and Peloton.
If found guilty, Left faces a maximum prison sentence of 25 years for securities fraud, 20 years for each count of securities fraud, and five years for making false statements.
According to the indictment, Left commented on publicly traded companies and made stock recommendations. The commentary often included sensational headlines (“Investors Peddling Themselves into Frenzy”) and exaggerated language to maximize the stock market’s reaction. As alleged, Left knowingly used his ability to influence 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 complaint further alleged that Left, prior to Citron publishing his comments, created long and short positions in a publicly traded company about which he commented in his trading accounts, prepared to close these positions quickly after Citron published them, and took profits on the short-term price movement caused by his comments.
Separately, the Securities and Exchange Commission said it is charging Left and Citron with what it called a $20 million fraud scheme that used “bait and switch” tactics to deceive investors. The SEC’s complaint, filed in the United States District Court for the Central District of California, accuses Left and Citron Capital of violating anti-fraud provisions of the federal securities laws.
“Andrew Left took advantage of his readers, building their trust and coercing them into trading under false pretenses so he could quickly change direction and profit from price movements following his reports,” Kate Zoladz, director of the SEC’s Los Angeles regional office, said in a statement.
The complaint seeks disgorgement, pre-judgment interest and civil fines against Left and Citron, as well as conduct-related injunctions, a ban on holding office as a director and executive officer and a ban on penny stock against Left.
Representatives for Citron Research did not immediately respond to a request for comment. According to the complaints, Left has moved from Beverly Hills, California, to Boca Raton, Florida.
The latest charges were not the first time Left has been accused of misconduct. In 2016, a Hong Kong court found that Andrew Left had committed market abuse by publishing false or misleading information about a Chinese property developer, Evergrande, in June 2012. But Evergrande, whose debts had ballooned to more than $300 billion, could not settle with its creditors and was ordered into liquidation earlier this year.
