Trash It, Crash It And Cash It
The financial world needs honest short sellers. Prosecutors convinced a jury that Andrew Left at Citron Research wasn't one of them.
““We’ve kind of gotten used to white-collar crime being completely normalized, so any prosecution for violation of securities law feels like selective enforcement.” – Claire Brown, Aristides Capital
If you want to be loved on Wall Street, don’t be a loud-mouthed short seller.
CEOs will blame you. Retail investors will curse you. Politicians will attack you. And sometimes even prosecutors will gun for you – even if you are right.
In a free market, short sellers are God's little messengers warning us that all is not right with the financial world.
Shorts were among the first to spot the rot at Enron, Lehman Brothers, Wirecard and countless other corporate disasters. During the financial crisis, Lehman Brothers convinced Washington that short sellers were the problem. History later revealed that Lehman was the problem.
Which brings us to Citron Research founder Andrew Left, one of America’s best-known activist short sellers.
Left, 55, was convicted Monday on securities-fraud charges stemming from what prosecutors described as a long-running market-manipulation scheme that generated roughly $21 million in profits. He now faces up to 25 years in prison when he is sentenced on Aug. 31.
Formerly a frequent guest on CNBC, Fox Business and Bloomberg Television, Left has been loudly unrepentant and plans to appeal the verdict. Yes, he’s continuing the very kind of bluster that made him a prosecutorial target in the first place.
Here’s what the man who is always talking his book told The New York Times:
“Amazing. I was actually criminally convicted on manipulating Nvidia Facebook and Tesla for telling the truth and making a profit. I am a bit speechless.”
“What this does for future of free speech is chilling. Can Individual investors not talk SpaceX? Wow. Still shocked.”
Read More On Left: Beyond Stupid (Business Blunders)
Oddly enough, prosecutors did not even try to prove that anything Left said about companies was false. And free speech is always a compelling defense.
Unfortunately, self-expression is not what this case was about.
Left was convicted because prosecutors convinced a jury that he was saying one thing while instantly doing another. He implied he was holding short positions when he was actually dumping them as soon as his TV and social media bluster drove them down.
Why wait for a hard-researched investing thesis to come true when you can profit simply by announcing one?
A 2024 indictment also accused Left of tipping off hedge funds in advance, giving them a chance to pile into trades, accelerating downward price momentum, before his market-moving reports and appearances drove shares lower. He was allegedly even paid for the service.
We’ve all heard of pump-and-dump artists. Left was accused of being a deflate-and-dump artist. We’ve all heard of stock promoters. Left was a stock demoter.
Prosecutors said he convinced investors to sell shares or short stocks alongside him – and then, true to his name, he Left.
