Short-seller Andrew Left faces criminal, civil fraud charges
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Andrew Left, owner and founder of Citron Research. Photo: Patrick T. Fallon/Bloomberg via Getty Images
Famed activist short-seller Andrew Left is facing criminal charges and civil complaints alleging that, for years, he manipulated stock prices and lied to investors about his positions.
Why it matters: The DOJ and SEC cases filed late Thursday and on Friday, respectively, are a result of long-standing investigations into traders that profit from betting a company's share price to fall — a practice that received renewed scrutiny following the meme stock frenzy.
- They're sending a message about the kind of behavior that is not going to be tolerated in the market, a source familiar with the matter tells Axios.
Driving the news: The DOJ is charging Left 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.
- If convicted, he faces up to 25 years in prison on the securities fraud scheme count, 20 years in prison on each securities fraud count, and five years in prison on the false statements count.
- Separately, the SEC's complaint alleges that Left engaged "in a $20 million multi-year scheme to defraud followers by publishing false and misleading statements regarding his supposed stock trading recommendations."
The SEC is seeking "disgorgement, prejudgment interest, and civil monetary penalties against Left and [his company] Citron and conduct-based injunctions, an officer-and-director bar, and a penny stock bar."
The other side: "I think the government's interest in trying to regulate … through cases they prosecute is a result of the meme stock craze, but Andrew Left has been around since 2001," Left's attorney James W. Spertus tells Axios.
- The DOJ indictment is based on "contorted rhetoric, trying to make it appear like he was telling lies," he said. "There's not one lie alleged that is provable."
The intrigue: Left feels "on some level, relieved," Spertus says, because this has been a multi-year investigation.
What's next: Left is expected to be arraigned in the next few weeks in U.S. District Court in downtown Los Angeles, per Reuters.
