Andrew Left, the founder of Citron Research, a well-known short-selling financial research firm, has entered a plea of not guilty to multiple securities fraud charges. On July 26, Left faced the charges in a federal court in Los Angeles, presided over by Judge Rozella Oliver. The judge imposed significant bail conditions, including a $4 million unsecured bond and a $1 million collateralized bond.
Left is required to post the collateralized bond by August 5. In addition, Judge Oliver ordered Left to surrender his passport due to the flight risk. This is because Left has over $70 million of overseas property. The opposite side argued, “He can walk out of this country and live a very luxurious life.”
Restrictions
In response to the charges, Left’s financial activities have been heavily restricted. He is not allowed to make any transactions exceeding $100,000 without special permission, and his trading activities have also been curtailed.
During the court proceedings, Left appeared with his hands cuffed and responded to the judge’s questions with brief, one-word answers. His trial is scheduled to begin on September 24.
Left has been vocal in the past about his belief that the cryptocurrency industry is filled with fraud. Citron Research has also previously targeted the sector, recommending that investors short Coinbase stock following a temporary outage of the exchange on February 28.
Serious Charges
The U.S. Securities and Exchange Commission (SEC) and the Department of Justice (DOJ) both filed charges against Left on July 26. The agencies accuse him of profiting $16 million through a deceptive practice known as “bait and switch” stock recommendations, which misled retail investors.
According to the SEC, Left would buy back stock immediately after advising his readers to sell and sell stock immediately after advising them to buy.
Left’s attorney, James Spertus, has labeled the case as “defective” and argues that Left had no obligation to disclose his personal trading intentions. Spertus has stated that Left would “never” accept a plea deal, as doing so would imply guilt. This case is part of a broader national effort to scrutinize the relationships between hedge funds and short-seller research firms.
Recently, short seller firm Culper Research criticized Bitcoin mining firm Iris Energy (IREN) on July 11, calling the firm “wildly overvalued” and accusing it of making grandiose claims about its artificial intelligence and high-performance computing plans without substantial investment.
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