What the case against Andrew Left says about following finfluencers
The recent federal lawsuits against famous short seller Andrew Left draw attention to the roles that financial influencers have in guiding investors’ decision making – and the wide range in the quality of the information available online.
In Left’s case, the Citron Research publisher allegedly misrepresented his firm and the positions he took in companies to manipulate stock prices to his advantage. Left’s attorney, in comments to the press, has denied the allegations, claiming that the charges against his client will have a chilling effect on short sellers broadly.
The Securities and Exchange Commission alleges that Left and his firm Citron Capital defrauded people who followed his stock-trading commentary to the tune of $20 million. In at least 26 instances, the defendants made long or short recommendations for 23 companies, whose stock prices fluctuated by an average of 12 percent after commentaries were published, according to the SEC.
“Left and Citron Capital quickly reversed their positions to capitalize on the stock price movements,” the regulator said in an announcement of the charges. “As a consequence, Left bought back stock immediately after telling his readers to sell, and he sold stock immediately after telling his readers to buy.”
In addition to the SEC’s lawsuit filed in US District Court for the Central District of California, the Department of Justice and US Attorney’s Office for the Central District of California filed a separate case against Left.
Left, 54, has faced sanctions in the past, including one by the National Futures Association in 1998 for allegedly making false and misleading statements to customers, according to the SEC’s complaint. He was also barred for five years by the Hong Kong
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