Over a year ago Andrew Left was identified by Bloomberg as living in fear of the feds, and today that fear was realized. Today, The US Department of Justice and the Securities Exchange Commission filed criminal and civil charges, respectively, against the infamous short seller.

This morning the SEC released a statement addressing the civil complaint, saying "“Andrew Left took advantage of his readers. He built their trust and induced them to trade on false pretenses so that he could quickly reverse direction and profit from the price moves following his reports,” said Kate Zoladz, Director of the SEC’s Los Angeles Regional Office. “We uncovered these alleged bait-and-switch tactics, which netted Left and his firm $20 million in ill-gotten profits, and we intend to hold Left and his firm accountable for their actions.”   

They continued" [Defendants]  falsely represented to the market that Citron Research was an independent research outlet that had never received compensation from third parties to publish information about target companies when, in fact, the defendants had entered into compensation arrangements with hedge funds." 👀

The SEC’s complaint is notable as it was filed in the United States District Court for the Central District of California, which - just a mere hour later - also this morning filed a complaint - comprising CRIMINAL charges - against Citron and Left, saying:

"A federal grand jury in the Central District of California returned an indictment yesterday charging a prominent activist short seller with multiple counts of securities fraud for a long-running market manipulation scheme reaping profits of at least $16 million.

According to the indictment, Andrew Left, 54, formerly of Beverly Hills, California, and now a resident of Boca Raton, Florida, was a securities analyst, trader, and frequent guest commentator on cable news channels such as CNBC, Fox Business, and Bloomberg Television. Left conducted business under the name “Citron Research” (Citron), an online moniker he created as a vehicle for publishing investment recommendations. Citron’s online presence included a website and a social media account on X, formerly known as Twitter."

Readers will recall that late last year, the US DOJ Attorney's office for the Central District of California formed a joint task force with the SEC to pursue fraud and market manipulation conducted by individuals. 

Today that task force did the work it foreshadowed. Notably, the complaint alludes to unnamed Hedge Funds participating in elements of the alleged market manipulation scheme.  If that is indeed the case, then we can expect more from the task force on this topic.  As a general matter, The DOJ playbook is charging the low-hanging fruit - the lackies - first and getting them to roll-up on potential co-conspirators. Here, it’s possible and even likely “hedge funds” are implicated in the scheme and if so they would represent the primary targets of the investigation.

tl;dr stay tuned.