Andrew Left found guilty in case that spooked short sellers

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Patrick Grandy, assistant director in charge of the FBI Los Angeles Field Office, said in a statement that Left’s conviction will “send a message to those who may be looking to profit from similar schemes.”

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Left built a sizable social media presence following prescient calls on China Evergrande Group in 2012 and Valeant Pharmaceuticals in 2015. Prosecutors claim that, from 2018 to 2023, Left published fewer reports and more tweets trash-talking stocks and setting “extreme” price targets for them.

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For example, early on Jan. 8, 2019, Left opened short positions in streaming-box maker Roku Inc., then posted on Citron’s Twitter account at 9:41 a.m. that Roku was “uninvestible,” driving down the stock, according to the government. Left then “falsely and misleadingly” claimed to be “watching ROKU from the side,” suggesting he wasn’t invested in the stock, prosecutors said. In actuality, he made US$700,000 from his short that day, the government said.

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Jurors found Left guilty on a single count of running a securities fraud scheme — the most serious charge — and multiple additional counts related to individual securities. He was found not guilty on other counts related to individual securities.

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The verdict, which came after two days of deliberations by the jury, is a win for the U.S. Justice Department in a white-collar criminal trial under U.S. President Donald Trump’s administration — though the Left case started under former president Joe Biden. Many such prosecutions have been scrapped under Trump, who has also issued pardons for some defendants who were convicted.

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Own defence

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Left took the rare step by a criminal defendant to testify in his own defence. That allowed him to explain his tweets and trades to jurors under friendly questioning by his lawyer. But he also faced a tense cross-examination by prosecutors who challenged his credibility and grilled him on private communications about his trading intentions that appeared to contradict his public statements about the companies he tracked.

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During his testimony, the judge repeatedly reminded Left to answer the prosecutor’s questions directly and twice struck his responses from the record.

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Left told jurors he doesn’t believe there is anything wrong with him profiting from the “price correction” of a stock after he issues a report or tweet about a company he thinks is overvalued or undervalued.

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“It’s the stock market,” Left said. “I say what I believe. I speak truth. If people want to read it, read it.”

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The trader also testified that he does not believe there is any law that bars him from making trades in the minutes and hours after he published social media posts or research reports on them, attempting to undercut a key element of the case.

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“There is no specific period of time, I believe, you have to hold the position after you make a comment,” Left said, adding that he never made a comment about a company that he did not believe.

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Prosecution

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Earlier in the trial, prosecutors presented emails that they say show Left coordinated with hedge funds on stocks he planned to short and bragged his “hot voice” with retail investors meant they could “take candy from a baby.”

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Jurors also heard from Mike Gorenstein, the chief executive officer of Canadian cannabis distributor Cronos Group Inc., who testified that he was stunned when Left issued a report saying the company was overvalued, prompting shares to plunge.

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After the jury was dismissed on Monday, Left’s lawyer asked for a mistrial, citing an unusual clerical error that resulted in the jury filling out an outdated version of the verdict form.