Topline
The Securities and Exchange Commission and Justice Department on Friday announced charges against Andrew Left, a prominent short-seller who bet against the meme stock craze behind GameStop twice, alleging he generated millions of dollars by misleading investors.
Left is accused of allegedly generating about $20 million by misleading investors.
Key Facts
Left is charged 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, the Justice Department said.
If convicted on each count, Left faces a maximum sentence of 370 years in prison, according to the Justice Department.
The SEC, which filed a separate complaint against Left, charged him and his venture capital firm Citron Capital with violating antifraud provisions of federal securities laws, a charge that would require Left to return all funds he allegedly obtained illegally and pay an additional, unspecified penalty if found guilty.
Left allegedly used his company and posts on social media platforms to publicly recommend taking long or short positions in 23 companies—including Roku, Meta and Nvidia, among others—on at least 26 occasions, before reversing his position in those companies as soon as shares jumped, the SEC claims.
As part of the alleged scheme, the Justice Department claims Left also misled investors by concealing Citron’s relationship with a hedge fund by fabricating documents and making “false and misleading statements” to the public about that relationship, including statements given to law enforcement.
An attorney for Left did not immediately respond to a request for comment.
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Big Number
$20 million. That’s how much the SEC claims Left earned in “ill-gotten profits” from his alleged fraud scheme. The Justice Department alleges Left earned at least $16 million over five years.
Surprising Fact
In 2016 Left was accused of misconduct by Hong Kong’s market regulator, which banned him from the city’s securities market. Regulators alleged Left misled investors by claiming China’s Evergrande Group—which was ordered to liquidate its assets years later—was covering up its inability to pay debts. Left has appealed the ban.
Key Background
Left was first targeted by the Justice Department in an investigation into short-sellers in early 2022. Agents showed up at Left’s home and seized his computers and trading records, Bloomberg reported at the time. A year earlier, Left and Citron—which Left founded in 2001 as the blog website StockLemon.com—bet against GameStop’s stock, claiming the video game retailer’s shares would drop significantly. Left closed his position at a 100% loss after a social media-led effort to beat short-selling efforts against GameStop and, at the time, Left indicated he would stop publishing short-selling reports. Earlier this year, Left reportedly announced a new short position in GameStop, a month before Keith Gill, a meme stock investor behind GameStop’s surge in 2021, announced a stake of 5 million shares in the company.
