Citron's Andrew Left faces US criminal charges over alleged fraud
Updates with legal expert reaction in paragraphs 16-17
By Chris Prentice
July 26 (Reuters) - U.S. authorities charged prominent activist short seller Andrew Left and his fund Citron Capital, alleging he had for years manipulated the market and defrauded investors with misleading claims about his positions in multiple stocks, including Nvidia NVDA.O and Tesla TSLA.O.
The Justice Department and Securities and Exchange Commission said on Friday that Left used his social media platform and cable news appearances to promote what he said were his long or short trades, only to quickly reverse his positions, making as much as $20 million in the process.
Left, 54, also concealed that third-parties, including hedge funds, fed his commentary and that in return for compensation he alerted them before publicizing his positions, allowing them to profit or mitigate losses, the Justice Department alleged.
"To maintain the false pretense that Citron’s recommendations and positions were sincerely held, defendant Left made false and misleading representations and half-truths about his economic incentives, conviction in Citron’s analyses, and valuations of Targeted Securities," the DOJ said.
Left's lawyer James Spertus said the investor plans to fight the charges. "There is no crime here," he said in an emailed statement.
"Mr. Left is a publisher who has taken extraordinary steps to comply with all laws, and neither the DOJ nor the SEC allege that he ever once published information he believed was not true when published."
Left is expected to be arraigned in the coming weeks in United States District Court in downtown Los Angeles.
Known for his sensational and colorful style, Left for more than a decade has been among the most prominent of a cohort of “short activists” who say they bet against public companies on the basis they were over-valued or engaging in outright fraud.
HIGH-PROFILE TARGETS
Among Left’s most high-profile targets were the now defunct China Evergrande, GameStop GME.N, Valeant Pharmaceuticals and Shopify. Proponents of short activists say they play a crucial role in the market, but critics have accused them of “short and distort” tactics that have unfairly damaged public companies.
Friday's charges are the culmination of a years-long probe by criminal prosecutors in Washington and Los Angeles and SEC investigators, which began investigating short-sellers and hedge funds in 2019, Reuters and other media have reported. Bloomberg first reported the DOJ probe in Dec. 2021.
The SEC and Justice Department focused on how Left publicly represented his position in high-profile stocks versus how he was really trading them, alleging that Left exploited his influence to manipulate the shares and reap quick profits.
Around Oct. 22, 2018, for example, the Justice Department alleged that Left took a long position in electric carmaker Tesla and the next day posted on X, then Twitter, that the firm was "LONG Tesla for this quarter." Minutes later, Left placed an order to sell more than half of his position for a profit of at least $1 million, the Justice Department alleged.
The next month, Left similarly promoted his long trade in Nvidia - which was trading around $144 - saying he expected the price to hit $165, only to sell his entire position less than two hours later, the Justice Department alleged.
An Nvidia spokesperson declined to comment, while Tesla did not immediately respond to a request for comment.
Left said publicly in 2019 that Citron had never been paid by a third party to publish research on stocks, but the Justice Department alleges that Left in 2018 and 2019 received more than $1 million each from two separate hedge funds who held short positions in stocks targeted by Left.
The novel charges may be challenging to prove in court, legal experts said.
"Some of the conduct described in the indictment is pretty normal in the short-seller community," said Robert Frenchman of New York law firm Dynamis. "You can still run afoul of securities laws when you lie about your position, your ties to hedge funds and the source of your search."
If convicted, Left would face a statutory maximum sentence of 25 years in federal prison for the securities fraud scheme count, up to 20 years in federal prison for each count of securities fraud, and up to five years in federal prison for the false statements count, the DOJ said.
The SEC is seeking disgorgement, prejudgment interest, civil monetary penalties and an officer-and-director bar, it said.
Reporting by Chris Prentice in New York, Niket Nishant in Bengaluru and Doina Chiacu in Washington; Editing by Shinjini Ganguli, Chizu Nomiyama, Michelle Price and Nick Zieminski
متعلقہ اثاثے
تازہ ترين خبريں
دستبرداری: XM Group کے ادارے ہماری آن لائن تجارت کی سہولت تک صرف عملدرآمد کی خدمت اور رسائی مہیا کرتے ہیں، کسی شخص کو ویب سائٹ پر یا اس کے ذریعے دستیاب کانٹینٹ کو دیکھنے اور/یا استعمال کرنے کی اجازت دیتا ہے، اس پر تبدیل یا توسیع کا ارادہ نہیں ہے ، اور نہ ہی یہ تبدیل ہوتا ہے یا اس پر وسعت کریں۔ اس طرح کی رسائی اور استعمال ہمیشہ مشروط ہوتا ہے: (i) شرائط و ضوابط؛ (ii) خطرہ انتباہات؛ اور (iii) مکمل دستبرداری۔ لہذا اس طرح کے مواد کو عام معلومات سے زیادہ کے طور پر فراہم کیا جاتا ہے۔ خاص طور پر، براہ کرم آگاہ رہیں کہ ہماری آن لائن تجارت کی سہولت کے مندرجات نہ تو کوئی درخواست ہے، اور نہ ہی فنانشل مارکیٹ میں کوئی لین دین داخل کرنے کی پیش کش ہے۔ کسی بھی فنانشل مارکیٹ میں تجارت میں آپ کے سرمائے کے لئے ایک خاص سطح کا خطرہ ہوتا ہے۔
ہماری آن لائن تجارتی سہولت پر شائع ہونے والے تمام مٹیریل کا مقصد صرف تعلیمی/معلوماتی مقاصد کے لئے ہے، اور اس میں شامل نہیں ہے — اور نہ ہی اسے فنانشل، سرمایہ کاری ٹیکس یا تجارتی مشورے اور سفارشات؛ یا ہماری تجارتی قیمتوں کا ریکارڈ؛ یا کسی بھی فنانشل انسٹرومنٹ میں لین دین کی پیشکش؛ یا اسکے لئے مانگ؛ یا غیر متنازعہ مالی تشہیرات پر مشتمل سمجھا جانا چاہئے۔
کوئی تھرڈ پارٹی کانٹینٹ، نیز XM کے ذریعہ تیار کردہ کانٹینٹ، جیسے: راۓ، خبریں، تحقیق، تجزیہ، قیمتیں اور دیگر معلومات یا اس ویب سائٹ پر مشتمل تھرڈ پارٹی کے سائٹس کے لنکس کو "جیسے ہے" کی بنیاد پر فراہم کیا جاتا ہے، عام مارکیٹ کی تفسیر کے طور پر، اور سرمایہ کاری کے مشورے کو تشکیل نہ دیں۔ اس حد تک کہ کسی بھی کانٹینٹ کو سرمایہ کاری کی تحقیقات کے طور پر سمجھا جاتا ہے، آپ کو نوٹ کرنا اور قبول کرنا ہوگا کہ یہ کانٹینٹ سرمایہ کاری کی تحقیق کی آزادی کو فروغ دینے کے لئے ڈیزائن کردہ قانونی تقاضوں کے مطابق نہیں ہے اور تیار نہیں کیا گیا ہے، اسی طرح، اس پر غور کیا جائے گا بطور متعلقہ قوانین اور ضوابط کے تحت مارکیٹنگ مواصلات۔ براہ کرم یقینی بنائیں کہ آپ غیر آزاد سرمایہ کاری سے متعلق ہماری اطلاع کو پڑھ اور سمجھ چکے ہیں۔ مذکورہ بالا معلومات کے بارے میں تحقیق اور رسک وارننگ ، جس تک رسائی یہاں حاصل کی جا سکتی ہے۔
