The Securities and Exchange Commission (SEC) has accused Andrew Left, a well-known activist short seller, and his firm, Citron Capital, of running a $20 million fraud scheme.
Andrew Left, who has previously bet against Grayscale Bitcoin Investment Trust, allegedly made several false and misleading statements to deceive his followers.
The SEC’s complaint also alleges that Left and Citron Capital made several false and misleading statements as part of their scheme.
Left Used Citron Research Social Media to Short Stocks
According to the SEC, Andrew Left used his Citron Research website and related social media platforms to publicly recommend long or short positions in 23 companies on at least 26 occasions.
The well-known Bitcoin skeptic claimed that these positions matched his own and those of Citron Capital. However, the complaint states that after Left’s recommendations, the prices of the targeted stocks moved an average of over 12%.
Left and Citron Capital then allegedly reversed their positions to profit from the price movements they had caused. Specifically, Left would buy back stocks right after advising his followers to sell and sell stocks right after advising them to buy.
Andrew Left took advantage of his readers. He built their trust and tricked them into trading based on false information, so he could quickly reverse his position and profit from the price movements after his reports,” said Kate Zoladz, Director of the SEC’s Los Angeles Regional Office.
“We uncovered these alleged bait-and-switch tactics, which netted Left and his firm $20 million in ill-gotten profits, and we intend to hold Left and his firm accountable for their actions.” said Zoladz.
SEC says Left Made Several False Statements
The SEC’s complaint further alleges that Left and Citron Capital made several false and misleading statements as part of their scheme.
For example, the defendants claimed they would hold onto a target stock until its price reached $65, but they started selling when the stock hit $28.
Additionally, they falsely portrayed Citron Research as an independent research source that had never received payment from third parties to publish information about target companies.
In reality, the complaint alleges that the defendants had compensation arrangements with hedge funds, according to the SEC.
FAQs:
1. What are Andrew Left and Citron Capital accused of by the SEC?
- The SEC has accused Andrew Left and his firm, Citron Capital, of running a $20 million fraud scheme involving false and misleading statements to deceive investors.
2. How did Andrew Left allegedly deceive his followers?
- Andrew Left is accused of making false and misleading statements to trick his followers into trading based on inaccurate information. He allegedly used his Citron Research website and social media platforms to recommend stock positions, then reversed his positions to profit from the resulting price changes.
3. What did the SEC say about Andrew Left’s use of social media?
- According to the SEC, Andrew Left used Citron Research’s website and related social media platforms to publicly recommend long or short positions in 23 companies on at least 26 occasions, which he allegedly used to manipulate stock prices for his own gain.
4. How did Left and Citron Capital allegedly profit from their scheme?
- The complaint alleges that Left and Citron Capital would buy back stocks after advising their followers to sell and sell stocks after advising them to buy, profiting from the price changes they had created.
5. What false claims did Left and Citron Capital make according to the SEC?
- The SEC alleges that Left and Citron Capital claimed they would hold onto target stocks until the price reached certain levels but started selling much earlier. They also falsely represented Citron Research as an independent source that never received compensation from third parties.
6. Did Left and Citron Capital have any financial arrangements with other entities?
- Yes, the SEC’s complaint alleges that Left and Citron Capital had compensation arrangements with hedge funds, contrary to their claims of being independent.
