Key takeaways:
- The founder of the financial research company Citron Research has been charged with securities fraud for allegedly generating $16M by recommending “bait and switch” stocks.
- Twenty-three companies—including Nvidia, American Airlines, Alibaba, Meta (formerly Facebook), and X (formerly Twitter)—made 26 trades.
The founder of the financial research company Citron Research, Andrew Left, has been charged with securities fraud for allegedly generating $16 million by recommending “bait and switch” stocks that would deceive ordinary investors.
Strongly skeptical of crypto, Left utilized social media and TV appearances to offer advice on equities in which he held short or long positions, according to a statement released by the US Securities and Exchange Commission (SEC) on July 26.
This gave rise to the misconception that, despite the fact that he frequently did the opposite, his public remarks on these stocks were consistent with his company’s trading activities.
“Left bought back stock immediately after telling his readers to sell, and he sold stock immediately after telling his readers to buy.”
The SEC filed a lawsuit in the US District Court Central District of California, claiming that between March 2018 and December 2023, Citron and Left participated in illicit trading and attempted market manipulation.
Twenty-three companies—including Nvidia, American Airlines, Alibaba, Meta (formerly Facebook), and X (formerly Twitter)—made 26 trades.
Concurrently, the US Department of Justice declared a criminal prosecution against Left, alleging that the short-seller had committed securities fraud and had misled federal law enforcement over hedge fund remuneration.
Left faces a 25-year prison sentence if all 18 of the fraud-related charges against him are found true. Just over two years have passed since he claimed that there is a lot of fraud in the crypto market.
Following the crypto exchange’s brief outage on February 28, Left’s Citron advocated for the short sale of Coinbase stock in February of this year.
Citron advised investors to short the “bloated” crypto exchange and take a long position in Bitcoin through one of the spot Exchange Traded Funds (ETFs).
