In This Story
Famed short sheller Andrew Left pleaded not guilty Monday to charges of fraud levied against him by the Justice Department.
Left was indicted on 19 counts for allegedly manipulating stocks and trading against positions he publicly shared on social media and in appearances business news channels on Friday. He surrendered in Los Angeles court Monday, and made his first court appearance in the case (of what will likely be many), Bloomberg reported.
The stock analyst and his firm Citron Capital were indicted by the Department of Justice Friday. The agency alleged that Left built up long or short positions in a company in his trading accounts and then, knowing his and Citron’s reputation had “the power to move markets.” He would then publish commentary to manipulate companies’ share prices and reap the windfall.
The agency alleged that Left made at least $16 million in quick profits by “fraudulently manipulating the stock market” from March 2018 to October 2023.
In one example, Left wrote to a portfolio manager about Nvidia in November 2018: “Do you want to make some fast money[.] Put together a thesis why nvda is oversold . . . We can destroy it . . . Just read the analyst notes from this past quarter and assemble the best of the ideas.”
He then took short-dated call options in Nvidia that expired three days later, which generate profit when a stock moves suddenly within the specified period. Left then promoted Nvidia on Citron’s X, then Twitter, account: “Citron buys $NVDA. This is the first time in 2 years stock offers an appealing risk-reward to investors . . . We see $165 before we see $120.” The Justice Department alleges that Nvidia’s stock was trading at approximately $143.64 at the time.
Despite claiming that he expected Nvidia’s share price to hit $165, Left sold off all of his prior positions less than two hours later, for a profit of at least $960,000. Nvidia closed at a high of $154 on the day of Left’s tweet and fell to $144 the next day, according to the agency.
Left was also given the title “The Bounty Hunter of Wall Street” in a 2017 New York Times feature for his ability to sniff out corporate fraud and catch the windfall from the stock fallout.
Left was also sued by the Securities and Exchange Commission (SEC) Friday. The regulator alleged that Left used his Citron Research website and social media platforms on several occasions to publicly recommend taking long or short positions in 23 companies, and then acted against those positions when the stock moved. Left appeared on several media outlets, including CNBC, Fox Business, and Bloomberg TV, to discuss his views on stocks.
“Andrew Left took advantage of his readers,” Kate Zoladz, director of the SEC’s Los Angeles regional office, said in a statement. He built their trust and induced them to trade on false pretenses so that he could quickly reverse direction and profit from the price moves following his reports.”
The SEC alleged that Left and his firm earned $20 million in “ill-gotten profits” from the practice.
On Monday, the judge gave Left until Aug. 5 to come up with $1 million for the collateralized bond, according to Bloomberg. His trial date is set for Sept. 24, and he was prevented from making transactions worth more than $100,000 and surrendered his passport until then.