Bad Influencer: Activist Short Seller Charged by DOJ And SEC with $20 Million Market Manipulation Scheme!

Charlene Lensburg
Fri, 26 Jul 2024 14:26:26 +0000
Court Cases, Influencers, Securities Manipulation

A federal grand jury in the U.S. has indicted Andrew Left, a prominent activist short seller, on multiple counts of securities fraud for allegedly orchestrating a long-running market manipulation scheme that netted at least $16 million in profits. Left, 54, is a well-known U.S. securities analyst and trader. Left frequently appeared as a commentator on major cable news channels such as CNBC, Fox Business, and Bloomberg Television. The SEC also filed charges against Left.

The U.S. Securities and Exchange Commission (SEC) charges Andrew Left and his firm, Citron Capital LLC, for engaging in a $20 million multi-year scheme to defraud followers by publishing false and misleading statements regarding his supposed stock trading recommendations. Under the Citron Research banner, Left published investment recommendations online, leveraging a website and social media presence on X (formerly Twitter).

The indictment alleges that Left exploited his influence to manipulate stock prices, often targeting companies popular with retail investors. By publishing sensationalized and exaggerated commentary, Left purportedly drove stock prices in directions that benefited his trading positions. He allegedly took long or short positions in stocks prior to his public recommendations and quickly closed these positions to capitalize on the short-term market movements his commentary induced.

Furthermore, Left is accused of using his advance knowledge of market-moving events to profit through short-dated options contracts. He supposedly placed limit orders to close his positions at favorable prices, often contrary to the public target prices he recommended.

To conceal his financial conflicts of interest, Left allegedly fabricated invoices, wired payments through third parties, and made false statements about Citron’s financial relationships with hedge funds. He also allegedly lied to federal investigators about his coordination with hedge funds.

Left’s influence grew through his frequent media appearances and social media activity, which bolstered his credibility. However, the indictment claims he misrepresented his trading positions during these appearances to further his scheme. For instance, he allegedly misled the public about his holdings after criticizing a company on CNBC’s “Fast Money.”

Andrew Left faces one count of engaging in a securities fraud scheme, 17 counts of securities fraud, and one count of making false statements to federal investigators. If convicted, he could face a maximum penalty of 25 years in prison for the securities fraud scheme count, 20 years for each securities fraud count, and five years for the false statements count.