Andrew Left Found Guilty in Case That Spooked Short Sellers

**SPEAKER_1** (0:02)
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**SPEAKER_2** (0:08)
This is Bloomberg Businessweek Daily, reporting from the magazine that helps global leaders stay ahead, with insight on the people, companies, and trends shaping today's complex economy, plus global business, finance, and tech news as it happens. The Bloomberg Businessweek Daily podcast with Carol Massar and Tim Stenovec on Bloomberg Radio.

**Tim Stenovec** (0:31)
This is one of the most read stories on the Bloomberg terminal in the past day. It crossed late yesterday. We got more details on it overnight. It's about the famed short seller Andrew Left. He faces the possibility of decades behind bars. He was found guilty of using disingenuous social media posts to manipulate stocks in a landmark case. It threatens to chill a broader trading strategy that's just loathed by corporate executives. We've got Erik Larson with us. He's US legal reporter for Bloomberg News. He joins us from Los Angeles. Erik, just remind us who Andrew Left is, what Citron Research made a name doing.

**Erik Larson** (1:04)
Sure. As you said, he grew a big following on Twitter, actually, is where he got so many followers tracking everything he was saying about companies that he was researching through Citron Research. He made some good calls back in the day on a few companies that gained him extra followers. Really, this group that was following him is who he tried to manipulate here according to the Justice Department. You mentioned this trading strategies that's loathed by companies. It has to do with building a short position on a company and then trashing it in a research report or tweets in Mr. Left's case. The government said that Mr. Left went a little beyond just doing that.
Like you said, it's a landmark case and the short-selling industry is really wondering what it means.

**Carol Massar** (1:51)
I always find it interesting, Erik, because I think about people can like a stock, talk it up, put out research. But when we get into short-selling, everybody gets a little bit hinky about that particular side of the trading.

**Tim Stenovec** (2:06)
Is that a legal term?

**Carol Massar** (2:07)
Yeah, it is. It's hinky go on the Bloomberg terminal.

**Tim Stenovec** (2:10)
Check with Erik.

**SPEAKER_1** (2:12)
What?

**Carol Massar** (2:12)
Go ahead.

**Erik Larson** (2:13)
I was going to say that word didn't come up at trial, but.

**Carol Massar** (2:17)
So what is it that he did though? Like if he talked it down and then was trading accordingly, but was he not trading?
Did the trading not match up with what he was saying? I guess essentially.

**Erik Larson** (2:31)
Well, that's exactly what it gets at. It wasn't just his shorts that were on trial here, some of his long bets as well. But the point that the government was making was that he was trading the opposite essentially of what he was saying on Twitter and in his reports about companies. More than a dozen companies were central to this, including Twitter itself, Facebook, NVIDIA even, and these were companies that he talked about a lot. In this time span between 2018 and 2023 is what was central to this case. He made $20 million in profits betting around some of these specific reports and tweets even that he put out.
The government looked at all of his private communications, his telegram communications, his emails, his texts to show a pattern of arranging specific trades right to time with his tweets and his reports that were opposite of essentially what he was saying. That's where the manipulation came in. It goes a little farther than just trading around your own report that you put out as a short seller. But it was a novel case. The prosecution had to explain it to this jury, and the defense really tried to pick it apart and say that Mr. Left had done nothing wrong, and ultimately, of course, he was found guilty.

**Tim Stenovec** (3:45)
One of the elements of this that I want to talk to you about, Erik, and I brought it up on our editorial call this morning, is what some of the experts quoted in your piece say about the effects this could have on short sellers. And Carol and I have talked about this in the past. This came up a few years ago, because Elon Musk was really, he's battled short sellers for years, and there are people out there who say, short sellers serve a really important part of efficient markets in terms of bringing information to light.
And I'm curious what the folks who are at the business schools or the accounting professors, like who study short selling and its effect on markets, think about a case such as this.