Andrew Left faces charges of securities fraud for manipulating stock market activity
Federal prosecutors have charged activist short seller and analyst Andrew Left with securities fraud, according to CNBC.
The charges allege that from 2018 through 2023, Left used his public platform to profit at least $16m by manipulating stock market activity contrary to his public positions.
Left, a 54-year-old Florida resident and frequent commentator on CNBC and other business channels, also faces civil fraud charges from the Securities and Exchange Commission (SEC).
The SEC's complaint, filed in Los Angeles federal court, accuses Left and his hedge fund, Citron Capital, of a $20m scheme to defraud followers by publishing false and misleading statements about his stock trading recommendations.
The complaint details fraudulent conduct related to 23 companies on at least 26 occasions.
The SEC alleges that Left boasted to colleagues about the effectiveness of his statements in influencing retail investors to trade based on his recommendations, comparing it to “taking candy from a baby.”
The indictment lists companies Left allegedly manipulated, including Nvidia, Tesla, X (formerly Twitter), Meta, Roku, Beyond Meat, American Airlines, Palantir, XL Fleet, Invitae, General Electric, Namaste Technologies, and India Globalization Capital.
It claims that Left coordinated with hedge funds to disseminate short reports and information on Twitter timing these publications to allow hedge funds to trade the targeted securities beforehand, in exchange for a portion of their trading profits.
Left is expected to be arraigned in Los Angeles federal court on a 19-count criminal indictment, which includes one count of engaging in a securities fraud scheme, 17 counts of securities fraud, and one count of making false statements to federal investigators.
The US attorney’s office in LA confirmed the charges. Left declined to comment when contacted by CNBC.
James Spertus, Left’s lawyer, stated that “Mr. Left is a publisher who has taken extraordinary steps to comply with all laws, and neither the [Department of Justice] nor the SEC allege that he ever once published information he believed was not true when published.”
Spertus argued that the allegations threaten “the integrity of the securities markets and put the health of our financial system at risk by trying to silence a publisher of truthful information who also trades in the securities he writes about.”
Akil Davis, assistant director in charge of the FBI’s Los Angeles Field Office, remarked that “Mr. Left’s presence on financial television networks and his significant online following provided him with a credible platform to allegedly disguise his intentions and manipulate the investing public for personal gain.”
The indictment details how Left used Citron’s online platform to comment on publicly traded companies, claiming their stock was either undervalued or overvalued.
It alleges that Left knew his recommendations influenced investors' decisions, allowing him to manipulate stock prices and profit from these movements.
In addition to the detailed instances, the SEC complaint describes how in May 2019, Left and Citron Capital had a short exposure in Beyond Meat, meaning they would profit if the stock price dropped.
Citron Research issued a negative tweet on Beyond Meat on May 17, 2019, recommending that readers sell the stock and assigning it a target price of $65 per share, while the stock was selling at about $87 per share.
The tweet stated, “$BYND has become Beyond Stupid” and “We expect $BYND to go back to $65 on earnings.” Despite his public statements, Left had told a colleague just ten days earlier that he thought the price of Beyond Meat would increase, saying “I think BYND goes to 100.”
Within seven minutes of the tweet, Left exited most of his short exposure to Beyond Meat, and Citron Research completely covered its short positions within 12 minutes of the tweet.
Later that day, in response to a reporter’s inquiry from CNBC about whether he still held a trading position in Beyond Meat, Left falsely claimed he had “shorted some today,” despite having already exited most of his short position.
The indictment and SEC complaint collectively illustrate a pattern of alleged manipulation and exploitation of Left’s media contacts and influence to profit from stock price movements.
Left, who previously lived in Beverly Hills, California, faces a maximum possible sentence of 25 years in prison if convicted of the securities fraud scheme.
