Left Argues Short Selling Case Should Be Civil, Not Criminal | Company Business News

(Bloomberg) — A lawyer for Andrew Left urged a judge on Monday to toss out securities fraud charges against the activist short seller, arguing that a criminal case with a threat of decades behind bars isn’t the way to create new rules for the industry.

A parallel civil suit by the US Securities and Exchange Commission is a more reasonable way to proceed with creating new rules for the lightly regulated industry and the criminal case should be dismissed, Left’s lawyer, Eric Rosen, said at a hearing Monday in federal court in Los Angeles. A judge in April denied Left’s request to dismiss the SEC suit.

Left, whose stock tips were closely watched by thousands of investors, was charged in July 2024 following a wide-ranging probe into the short selling industry. He and his firm, Citron Research, are accused of using false and misleading social-media posts about his trading plans in more than a dozen companies to nudge their stock up or down enough to make a quick profit.

“If they want to legislate by enforcement it should be in the civil realm,” Rosen said.

The case has already led to some self-imposed changes in the industry as a number of short sellers beefed up their disclaimers about their own trading activity. Left, 54, has pleaded not guilty. He faces as much as 25 years in prison if convicted.

Prosecutors claim Left used his clout with investors to try to game the system with his posts about multibillion dollar companies like American Airlines Group Inc. and Tesla Inc., as well as smaller outfits like Namaste Technologies Inc. 

‘Extreme’ Target Prices

Left and Citron allegedly posted “extreme” target prices for companies he researched in hopes that investors would trade one way while he traded another. Prosecutors say he concealed his ties to hedge funds that allegedly made trades on his behalf and maintaining “the false pretense that the content of the Citron’s commentary was not tainted by any conflict of interest.”

On Monday, Rosen went through a list of the securities outlined in the indictment, where Left made comments about stock prices. He said Left’s commentary about the companies was truthful even if he didn’t always disclose accurately his intended trading activities. 

“What is alleged in the indictment is the opposite of fraud,” Rosen said. He called the case a “travesty” of justice based on “truth charged as fraud.” 

Federal prosecutor Matthew Riley urged the judge to reject Left’s interpretation of securities fraud, calling it “common sense.” Left used his “prominent role in the media” to make sweeping comments about companies while failing to include his planned trading.

“He was going to buy when he’d told the public to sell,” Riley said. “He was going to sell when he told people to buy.”

The hearing follows recent efforts by Rosen to persuade the Justice Department to drop the fraud charges, which were filed against Left during the previous administration. The lawyer said in May that the strategy hinges on arguing directly to government officials that the case against Left isn’t in line with President Donald Trump’s enforcement priorities.

But Riley said at the hearing the government wants the case to go to trial. There’s a scheduled trial date in March 2026. 

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