By Michelle Price
June 1 (Reuters) – A U.S. jury found prominent investor Andrew Left guilty of securities fraud on Monday, the Justice Department said, in a blow to a divisive cohort of short sellers who have for years goaded public companies in the U.S. and overseas with allegations of fraud and mismanagement.
U.S. authorities charged Left in July 2024, alleging he had manipulated the stock market and defrauded investors with misleading claims about his positions in multiple companies’ shares, including Nvidia and Tesla, making at least $20 million in the process.
Left, who runs Citron Research, denied the allegations and had pleaded not guilty.
After two days of deliberations, however, the jury found him guilty of engaging in a securities fraud scheme and 12 of 16 other counts related to specific trades. It acquitted him of four other counts, a Justice Department spokesperson said, adding Left will be sentenced on August 31.
An attorney for Left did not immediately answer a call seeking comment or a subsequent text message asking if Left would seek to appeal.
“Not once did anyone say I lied…There were no false statements,” Left wrote in a post on his Citron Research X account on Monday. “We disagree with the jury and this does not stop here. We will keep fighting for free, honest speech and opportunity, the backbone of this country. This is not over.”
During the 15-day trial, U.S. prosecutors cast Left as an opportunist who profited by scaring retail investors, while his defense said Left genuinely believed in his stock calls. In an unusual and risky move, Left took the stand to explain his investment decisions.
AGGRESSIVE LEGAL THEORY?
Known for his sensational and colorful style, Left has, for more than a decade, been among the most prominent group of short activists who say they bet against public companies on the basis they are overvalued or engaging in outright fraud, drawing the ire of companies that have fought to curb their bets.
Short sellers seek to profit off bets a stock will fall, although Left also took long positions.
Prosecutors alleged Left, 55, exploited his influence through social media and cable news appearances to tout what he said were his trades, only to quickly and secretly close out his positions to profit from short-lived price movements.
For Left’s scheme to work, retail investors had to believe that he was putting his money where his mouth was, said prosecutors, who called several witnesses, including retail investors they said had been hurt by Left’s calls.
Left faces a statutory maximum sentence of 25 years in federal prison for one count of a securities fraud scheme, and up to 20 years in federal prison for each count of securities fraud. Some legal experts argued the Justice Department’s case was aggressive. Long criticized, short sellers have often defended themselves by leaning on First Amendment rights. Investors are also free to change their minds.
Prosecutors, though, leant on Left’s private messages as well as evidence of his other behind-the-scenes dealings, to show that his true intention was to manipulate.
They also alleged that, in return for compensation, he alerted hedge funds before publicizing his positions, and concealed the coordination using fake invoices.
(Reporting by Michelle Price and Fabiola Arámburo; Editing by Jacqueline Wong and Muralikumar Anantharaman)
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