Andrew Left and his firm, Citron Capital, notorious for their involvement in the GameStop short selling saga, faced legal actions on Friday from both the U.S. Securities and Exchange Commission (SEC) and the Department of Justice (DOJ). The charges allege a multi-million-dollar fraud scheme, prompting GameStop fans and followers of the stock influencer “Roaring Kitty” to celebrate online.
🔥Famous Tesla short seller Andrew Left (Citron) was charged with fraud.
I recommend to rewatch this famous Cramer clip. Cramer explains how the short selling business model actually work.
It’s all about manipulating momentum. This is precisely why you see in Tesla’s case after… pic.twitter.com/MHigpoGzd9— AJ (@alojoh) July 26, 2024
According to the SEC, Left and Citron Capital disseminated false and misleading information in their stock recommendations between 2018 and 2020. The SEC claims that on at least 26 occasions, Left used Citron’s newsletter to promote specific long or short positions that aligned with his and the firm’s investments. This strategy led to an average stock price movement of 12%, after which Left and Citron Capital would allegedly reverse their positions to capitalize on the new price levels, generating approximately $20 million in profits.
The SEC’s complaint suggests Left exploited his audience’s trust, using their responses to his recommendations for his own financial gain. Kate Zoladz, Director of the SEC’s Los Angeles Regional Office, stated that Left “took advantage of his readers,” manipulating them into trading based on deceptive information to benefit personally from subsequent price shifts.
The SEC seeks various penalties, including financial sanctions, conduct-based injunctions, and bans preventing Left from holding officer or director positions or trading in penny stocks. Meanwhile, the DOJ’s charges mirror those of the SEC but estimate the fraudulent gains at $16 million. The DOJ’s charges, being criminal, could lead to significant prison time for Left if convicted. He faces multiple counts, including one for engaging in a securities fraud scheme, 17 counts of securities fraud, and one count of making false statements to federal investigators, with potential penalties amounting to 25 years in prison for the fraud scheme alone.
GameStop, Nvidia Short Seller Hit With SEC and Criminal Fraud Charges
Andrew Left and Citron Capital have been charged by the SEC and DOJ for a multi-million-dollar fraud scheme—and GameStop fans are celebrating.
Read more: https://t.co/FVJ1sL9o8W pic.twitter.com/IdamuiIy5t— Mars Signals (@MarsSignals) July 26, 2024
Andrew Left, who owns Citron Capital, gained prominence through Citron Research, a platform known for its critical reports on various stocks. As a short seller, Left frequently took positions against stocks, including GameStop, aiming to profit from their decline. During the GameStop saga, short sellers like Left were vilified by the meme stock community, particularly by followers of Keith Gill, also known as Roaring Kitty. Gill and his followers on Reddit’s WallStreetBets forum orchestrated a massive buy-up of GameStop shares, leading to a short squeeze that sent the stock price soaring and inflicted heavy losses on short sellers, including Left.
While Citron Capital did not suffer the same fate as Melvin Capital, another hedge fund forced to shut down due to the short squeeze, Left remained a prominent figure in the controversy. Despite receiving threats during the height of the meme stock frenzy, Left continued his short position on GameStop until early this year when Citron Capital finally exited the trade following another surge in the stock’s value. Left’s firm expressed disdain for the market’s irrationality on Twitter, describing the Roaring Kitty saga as “an insult to the capital markets.”
🚨 BREAKING:
The SEC has filed a lawsuit against Andrew Left and Citron Capital LLC, alleging a $20 million fraud scheme
The charges include:
• making false and misleading statements about stock trading recommendations AND engaging in stock short sales
• securities fraud… pic.twitter.com/MQnfsyrx3n— RoaringKittyTracker (@kittytrcker) July 26, 2024
The legal actions against Left have been met with jubilation from GameStop supporters, who see it as a victory against those they perceive as manipulating the market to their detriment.
Major Points:
- Andrew Left and Citron Capital face charges from the SEC and DOJ for allegedly engaging in a multi-million-dollar fraud scheme involving false stock recommendations.
- The SEC claims Left used his Citron newsletter to manipulate stock prices, profiting around $20 million by reversing positions after influencing stock movements.
- The DOJ’s criminal charges estimate Left’s fraudulent gains at $16 million, with potential penalties including up to 25 years in prison for the most severe charges.
- Left, known for short selling, became a controversial figure during the GameStop saga, which involved retail investors countering short sellers through a coordinated stock buy-up.
- The charges against Left have sparked celebration among GameStop supporters and the online community following the meme stock movement.
Charles William III – Reprinted with permission of Whatfinger News
