FOIAengine: How the “Bounty Hunter of Wall Street” Hedged His Bets
As a young man, Andrew Left was a “real serious kid” – and very religious.
He wanted to be a rabbi.
But then, in his telling, Left saw a newspaper ad that said, “Earn $100,000.”
“I thought, ‘Yeah, I’ll do that.’”
The company posting the ad turned out to be a shady commodities futures firm. On the way to the interview, Left spotted a Mercedes. “Wow, a Mercedes!,” he later recalled.
Left, no older than 25 at the time, really wanted that ride. He joined the futures broker and started cold-calling prospects. In 1998, the National Futures Association (NFA) sanctioned the firm and its employees, including then-27-year-old Left.
A hearing panel found at the time that Left made “false and misleading statements to cheat, defraud, or deceive a customer,” and that his “conduct was inconsistent with just and equitable principles of trade.” Left was ordered to take an ethics training course, and was banned for three years from working for any NFA member.
He then chose a lucrative new line of work: activist short seller. Fame and fortune followed.
Until it didn’t. Prosecutors investigating the shadowy world of activist short sellers served a search warrant for Left’s computers early in 2021. But in the ensuing years the investigation appeared dormant. Still, Left said he was living in fear of what might be coming.
On July 26, criminal and civil securities fraud charges were filed against Left and his company, Citron Capital, giving new life to the long-rumored federal investigation into short sellers that, according to Bloomberg, has targeted almost 30 investment and research firms, and three dozen individuals associated with them.
The charges against Left, now 54 years old, came in a grand jury indictment handed up in Los Angeles, and in a companion civil lawsuit from the Securities and Exchange Commission. In a press release, the U.S. Attorney’s Office in Los Angeles accused Left of masterminding a “long-running market manipulation scheme reaping profits of at least $16 million.” The SEC put the number higher, calling it “a $20 million multi-year scheme to defraud followers by publishing false and misleading statements regarding his supposed stock trading recommendations.” Both actions seek restitution. Substantial prison time is a near certainty if Left is convicted on some or all of the 19 criminal counts.
Activist short sellers have cult followings on social media, and they often revel in their notoriety. We’ve covered many of them in these pages, including Hindenburg Research’s Nathan Anderson, Muddy Waters’ Carson Block, Orso Partners’ Nathan Koppikar, and Safkhet Capital’s Fahmi Quadir, aka “the Assassin.” Those we’ve written about have something more in common than just the catchy names that bring to mind looming disaster (“orso” means bear; the Hindenburg crashed and burned; “citron” means lemon; and an assassin – well, you get the idea). They also have a Freedom of Information Act footprint, either from probing a target, or being one. We’ll come back to that. First, some background.
The kind of short sellers we’re talking about are those who target a publicly traded company whose stock they believe to be overvalued, and then widely circulate their findings across online platforms and social media in the hope that others will join the selling and drive the stock price down even more.
In and of itself, short selling is a legal trading strategy that, proponents say, leads to corporate accountability and more efficient markets. The short seller identifies a vulnerable target, borrows shares (or buys “put” options) in that company, and then sells the shares at the current market price. Later on, the short seller “covers the short” by buying back the stock at a hoped-for lower price, pocketing the difference. The goal is to profit from the future decline in the stock price.
What’s different about the activists is their use of hype and publicity to beat down a stock. For a short seller to win big at this high-stakes game, investors on the other side of the transaction necessarily must lose. And although there’s an inherent risk of loss in any investment, what the feds saw in Left’s case was something else: a rigged market, manipulated by Left to scam millions from those who believed what he told them.
The way it worked, according to the 38-page federal indictment, was simple: Left lied about his company, and his intent. Prosecutors alleged that when Left appeared on cable news channels such as CNBC, Fox Business, and Bloomberg Television to tout one of his research reports (Citron’s website says there were more than 150 of them), Left already had lined up trades to quickly profit from the price swings his commentary created – “at prices vastly different from the target prices that Left recommended to the public.”
The feds called this making “false representations to the public to bolster his credibility, [while] behind the scenes, Left allegedly took contrary trading positions to reap quick profits off the stocks he either promoted or pilloried through Citron.”
The indictment further alleged that “to create the false impression that he managed outside investors’ money, in order to bolster his influence with the investing public and ability to artificially move securities prices, Left made false and misleading statements –- including publicly issuing ‘investor letters’ – to advance the false pretense that he successfully managed third-party investors’ funds and was a credible investment adviser. In fact, Citron Capital never had outside investors. Knowing that Citron’s influence on the market was largely based on Left’s personal reputation and market-moving capacity, Left also falsely represented that he did not share Citron’s commentary with hedge funds before the reports were published.”
The truth, the indictment said, was different. “Left often provided third parties, including hedge funds, with advance notice of the anticipated publication of Citron’s commentary to enable the third parties to profit by trading around the commentary and, in other instances, mitigate their losses by adjusting their positions before publication.”
The indictment didn’t name any of the hedge funds that Left allegedly had deals with, instead identifying two as “Hedge Fund A” and “Hedge Fund B.” But in a press release about its companion case against Left, the SEC offered a clue: The agency had filed, and settled, charges the previous month against Dallas-based investment adviser Anson Funds Management and Toronto-based Anson Advisors – for collaborating with Left.
Which brings us to Left’s FOIA footprint.
When the federal charges against Left were filed, we searched PoliScio Analytics’ competitive-intelligence database FOIAengine, which tracks FOIA requests in as close to real-time as their availability allows, to see if there were signals about who or what Left might have been watching. FOIA requests to the federal government can be an important early warning of bad publicity, litigation to come, or uncertainties to be hedged and gamed out. In Left’s case, the clues were few, but the timing was interesting.
By the Fall of 2021, reports had surfaced about criminal search warrants being served on Left and others. But a warrant had been served on Left much earlier, in January of that year. A few months later, on April 14, a request was made to the SEC for “material information related to an SEC investigation into Citron Research.” It was a signal; someone was fishing. That FOIA request was closed by the agency “for other reasons.”
By the end of 2021, however, the SEC was claiming a law-enforcement FOIA exemption for information about Left and Citron. On December 22, 2021, California attorney Heather Speers, at the white-collar defense firm Cooley LLP, sought “all documents produced by Citron to the Securities and Exchange Commission related to any investigation of Citron Research or Andrew Left.” Her request was denied in full.
Left, meanwhile, dialed back his activity after the 2021 search warrant. That included wiping everything from his social media account on Twitter, later renamed X. But by 2023, with no word about an impending indictment, he jumped back into the game, reactivating his social-media presence on X. Left started chasing a new target, Kazakhstan-based Freedom Holdings, and its CEO, Timor Turlov.
Left published a research report savaging Freedom Holdings on April 19, 2023. Three days later, Left filed a FOIA request with the SEC (later denied in full) for “information on public company Freedom Holdings or Freedom Finance and their CEO Timur Turlov.” Freedom Holdings stock had been on a rocket ride since 2017, from a low of 61 cents a share to a peak, in 2023, of about $103. At about $90 a share this week, it’s still riding high.
The same cannot be said for Left. His last post on X appeared on June 12, the day after the SEC announced the settlement with two of his alleged hedge-fund collaborators. The post said Left was closing his bets against one of his longtime meme targets, GameStop. “Citron will be watching from the sidelines for now.”
On July 26, the day the federal charges were filed against Left, Bloomberg reported “shock waves across the already shrinking field of investors who specialize in betting against specific stocks. For a group that has long courted controversy by taking on some of the biggest names in business, it’s a particularly sobering moment.”
Left is charged with one count of engaging in a securities fraud scheme, 17 counts of securities fraud, and one count of making false statements to federal investigators. If convicted, he faces a maximum penalty of 25 years in prison on the securities fraud scheme count, 20 years in prison on each securities fraud count, and five years in prison on the false statements count.
On the day of the indictment, Left’s lawyer, James Spertus, telegraphed his defense. Spertus said his client simply was doing what any other researcher or publisher would do upon discovering an overvalued stock. “The fact that Mr. Left trades in the securities he researches and writes about is well known to everyone, and there is no rule or law requiring a publisher who discloses that he is trading to also publish his private trading intentions,” Spertus said. “The allegations filed today should concern all investors because the publication of truthful information is critical to efficient markets.”
Left surrendered in Los Angeles and pleaded not guilty. A magistrate judge in the case allowed him to remain free on a $5 million bond, $1 million of which was posted in cash. His wings were clipped: passport surrendered, travel restricted to California and Florida, drug testing. But the judge added an important handwritten notation: The man once known as the Bounty Hunter of Wall Street can still play the market, as long as he does so “under his own name.”
A jury trial is set for September 24.
FOIAengine access now is available for all professional members of Investigative Reporters and Editors, a non-profit organization dedicated to improving the quality of journalism. IRE is the world’s oldest and largest association of investigative journalists. Following the federal government’s shutdown of FOIAonline.gov last year, FOIAengine is the only source for the most comprehensive, fully searchable archive of FOIA requests across dozens of federal departments and agencies. FOIAengine has more robust functionality and searching capabilities, and standardizes data from different agencies to make it easier to work with. PoliScio Analytics is proud to be partnering with IRE to provide this valuable content to investigative reporters worldwide.
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Next: Hedge fund requests to the SEC and FDA.
John A. Jenkins, co-creator of FOIAengine, is a Washington journalist and publisher whose work has appeared in The New York Times Magazine, GQ, and elsewhere. He is a four-time recipient of the American Bar Association’s Gavel Award Certificate of Merit for his legal reporting and anaclysis. His most recent book is The Partisan: The Life of William Rehnquist. Jenkins founded Law Street Media in 2013. Prior to that, he was President of CQ Press, the textbook and reference publishing enterprise of Congressional Quarterly. FOIAengine is a product of PoliScio Analytics (PoliScio.com), a new venture specializing in U.S. political and governmental research, co-founded by Jenkins and Washington lawyer Randy Miller. Learn more about FOIAengine here. To review FOIA requests mentioned in this article, subscribe to FOIAengine.
Write to John A. Jenkins at JAJ@PoliScio.com.