SEC Sues Citron Capital, Alleges Andrew Left Orchestrated $20M ‘Bait Trade’

• The US SEC charges Andrew Left and his firm Citron Capital for being involved in $20M “bait trade” stock recommendations.
• Left used media platforms to falsely promote stocks, which he said were his short or long trades.
• The DOJ filed a criminal case against Left, as well, for securities fraud and market manipulation.

The U.S. Securities and Exchange Commission has filed a lawsuit against activist short seller Andrew Left and his firm Citron Capital, alleging securities fraud. According to a July 26 statement, Left allegedly engaged in a years-long scheme involving $20 million in misleading “bait trade” stock recommendations aimed at retail investors.

The SEC alleges that Left used social media platforms and television appearances to recommend stocks, claiming they were his own short or long trades. This misled investors into believing his public comments aligned with his firm’s trading activity. However, the SEC claims that he often executed the opposite trades. By deceiving investors, Left allegedly used Citron Research reports and X (formerly Twitter) posts to trigger price movements, allowing him to profit in the short term.

Kate Zoladz, Director of the SEC ’s Los Angeles Regional Office, detailed on Left’s tactics in gaining investors’ trust and misleading them to earn nearly $20 million. Zoladz cited,

“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. We uncovered these alleged bait-and-switch tactics, which netted Left and his firm $20 million in ill-gotten profits.”

In a parallel action, the U.S. Department of Justice (DoJ) filed a criminal case against Left, accusing him of securities fraud and market manipulation. If convicted on all 18 charges, Left could face at least 25 years in prison. The irony is not lost that Left, who has been vocal in his criticism of cryptocurrencies as fraudulent, now faces fraud charges himself .

Left’s lawyer, James Spertus, has vowed to fight the charges . Spertus maintains that Left is innocent of any wrongdoing and has taken extraordinary steps to comply with the law.