dpShort-seller Andrew Left was convicted Monday of securities fraud for a tweet-and-trade operation — a verdict that could have consequences on Wall Street.
After two full days of deliberations, the jury found him guilty of the top count of engaging in a securities fraud scheme and then 12 of 16 other counts related to specific trades, acquitting him of four counts.
Left’s lawyer put his hand on his client’s back as he listened to the cavalcade of “guilty” in the Los Angeles courtroom. Left took off his glasses and stared intently at the jury as the judge polled each member on whether they agreed with the verdict.
“I think the jury got it wrong and it’s not the end of the road,” Left, who appeared shaken, told reporters after the verdict.
“I think it’s scary,” he added. “We’re about to have the most talked about stock in the history of the stock market hit the market with SpaceX, and I think it’s chilling when you’re taking individuals and you’re limiting their ability to have free speech and trade with honest opinions.”
Left, a 55-year-old investor and financial commentator — who made the risky move of testifying in his own defense — faces a maximum of 25 years in federal prison when he’s sentenced Aug. 31, though he’s likely to get less.
His lawyers made an immediate motion for a mistrial because jurors were initially given a verdict sheet with a count — charging him with lying to an investigator — that was thrown out by the judge before the trial. The judge did not rule on the motion.
The federal case has been closely watched because it focused on the question of what short-sellers, who bet that a stock price will fall, can say and do within the limits of the law.
Left, the founder of Citron Research, made his name as an activist short-seller who published scathing reports about public companies, exposing mismanagement or even fraud. He also infamously shorted GameStop, unleashing rage from its fans.
Prosecutors accused him of misleading retail investors and hurting companies by using social media to publicize Citron reports, leading his followers to make trades — then quietly closing his own positions at a different price than the one he recommended.
The government told the jury how Left boasted that the profitable trades he made after putting out his market-moving reports were like “taking candy from a baby” and that he could “send a stock tumbling with a single tweet.”
In his closing argument last week, the prosecutor, Matthew Reilly, told jurors that Left was duplicitous — “tweeting with one hand and trading with the other.”
The witnesses called by the government included the CEO of a weed company whose stock tanked after Left lambasted it, and a retired firefighter who lost his investment in a company that Left publicly slammed.
Left took the risky step of testifying in his own defense, which subjected him to hours of cross-examination by a prosecutor.
He maintained he wasn’t swindling investors — he was warning them about companies he believed were on shaky footing. He argued he had no legal obligation to wait until the stock hit the target price he set to make his own moves.
His activities, he said, were the same as any other short-seller.
“I’m a trader,” he explained when asked about his market moves.
His attorney Eric Rosen told the jury in closing arguments: “The government wants you to convict a trader for trading like a trader… This is not a case. This is them sifting through thousands and thousands of emails to invent a case.”
The jury deliberated Friday with no verdict, then went home for the weekend. When they returned Monday, they sent out a note asking for a read-back of witness testimony. Left was not in the courthouse, sparking ire from the judge, who threatened to take him into custody if he left again.
This is a developing story.
