Citron Research founder Andrew Left, a prominent figure in the US short-selling community, pleaded not guilty to fraud charges brought by the Department of Justice.
According to Bloomberg, Left made his first appearance in a federal court in Los Angeles on Monday (July 29th). Last week, he was accused by the DOJ of market manipulation for personal gain and making false statements to investigators, which could potentially result in decades of imprisonment if convicted.
During the approximately 40-minute hearing, Magistrate Judge Rozella Oliver granted Left bail set at $4 million in unsecured bonds and $1 million in secured bonds, which was lower than the amount requested by the government. Oliver also mandated that Left produce $1 million by August 5th.
While awaiting trial, Left is barred from conducting financial transactions exceeding $100,000 without special permission, with restrictions placed on his trading activities. His trial is scheduled for September 24th, and he has been ordered to surrender his passport.
Over the years, Left gained notoriety among investors for his short-selling activities targeting specific stocks, including his attempt in 2012 to short Chinese property developer Evergrande.
Prosecutors alleged that Left manipulated trades through his personal influence and Citron Research platform to unfairly benefit himself.
The DOJ stated that Left created a misleading impression by aligning his public commentary on stocks with his trading activities. Prosecutors claimed that at times, Left would swiftly close positions after issuing research reports or comments, allowing him to exploit short-term price fluctuations.
Left’s lawyer, James Spertus, argued last Friday that the government’s charges against Left were flawed, emphasizing that Left wasn’t obligated to disclose his personal trading intentions. Spertus added that the government did not accuse Left of disseminating false information.
Left’s indictment is part of a broader investigation conducted by the US into interactions between hedge funds and skeptical researchers. For three years, investigators have been seeking trading information involving over fifty stocks and pertaining to dozens of fund managers, actions that have sent shockwaves through the industry.
Furthermore, the US Securities and Exchange Commission filed a civil lawsuit against Left for alleged legal violations last Friday.