Famed Short Seller Found Guilty of Fraud

A federal grand jury in California has convicted short seller Andrew Left of securities fraud. Left, who was a securities analyst, trader, and guest commentator on television channels including CNBC and Fox Business, was charged in July 2024 with one count of engaging 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 would make money betting that stocks would fall.

• The Justice Department said Tuesday that Left was convicted of one count of participating in a securities fraud scheme and 12 counts of securities fraud, the AP reports. He is scheduled to be sentenced on Aug. 31. He faces a maximum penalty of 25 years in prison.

• "Andrew Left used his expertise to profit at the expense of retail investors, ordinary people who owned the stocks he targeted. He callously boasted that it was like 'taking candy from a baby,'" Assistant Attorney General A. Tysen Duva of the Justice Department's Criminal Division, said in a statement. "Egregious schemes like this strike at the heart of free, fair, and open markets, and warrant prosecution when they involve criminal manipulation." Investors, he said, "should have confidence that US markets are safe and free from the type of deliberate manipulation that Left engaged in."
• Prosecutors said Left made more than $20 million on trades between 2018 and 2023, the New York Times reports. The charges involved statements he made about companies including Tesla, Nvidia, American Airlines, and cannabis company Cronos Group.
• The Justice Department previously said that Left conducted business under the name Citron Research, which had a website that published investment recommendations. He published research on companies ranging from Tesla and GameStop to Grand Canyon Education and Peloton.
• According to the indictment, Left would comment on publicly traded companies and make recommendations on the shares. The commentary often included sensationalized headlines ("Investors Peddling Themselves into Frenzy") and exaggerated language to maximize the reaction it would get from the stock market. As alleged, Left knowingly exploited his ability to move stock prices by targeting stocks popular with retail investors and posting recommendations on social media to manipulate the market and make fast, easy money.

• The indictment further alleged that before Citron would publish its commentary, Left would create long or short positions in a public company on which he was commenting in his trading accounts and prepared to quickly close those positions after Citron's publication and take profits on the short-term price movement caused by his commentary.
• In a post on X under the Citron Research handle, Left expressed his opposition to the conviction. "We disagree with the jury and this does not stop here," the post said. "We will keep fighting for free, honest speech and opportunity, the backbone of this country. This is not over."
• "What this does for future of free speech is chilling," he tells the Times. "Can Individual investors not talk SpaceX? Wow. Still shocked."