SEC v. Andrew Left; and Citron Capital, LLC, No. LR-26056, Central District of California (July 26, 2024) — Press Release

U.S. SECURITIES AND EXCHANGE COMMISSION Litigation Release No. 26056 / July 26, 2024 Securities and Exchange Commission v. Andrew Left, and Citron Capital, LLC, No. 2:24-cv-06311 (C.D. Cal. filed July 26, 2024) SEC Charges Andrew Left and Citron Capital for $20 Million Fraud Scheme The Securities and Exchange Commission today announced charges against activist short seller Andrew Left and his firm, Citron Capital LLC, for engaging in a $20 million multi-year scheme to defraud followers by publishing false and misleading statements regarding his supposed stock trading recommendations. The SEC’s complaint alleges that Left, who resides in Boca Raton, Fl., used his Citron Research website and related social media platforms on at least 26 occasions to publicly recommend taking long or short positions in 23 companies and held out the positions as consistent with his own and Citron Capital’s positions. The complaint alleges that following Left’s recommendations, the price of the target stocks moved more than 12 percent on average. According to the SEC’s complaint, once the recommendations were issued and the stocks moved, Left and Citron Capital quickly reversed their positions to capitalize on the stock price movements. As a consequence, Left bought back stock immediately after telling his readers to sell, and he sold stock immediately after telling his readers to buy. The complaint alleges that Left and Citron Capital made several false and misleading statements in connection with the scheme. For example, it alleges that defendants told the market that they would stay long on a target stock until the price hit $65 when, in fact, they immediately began selling the stock at $28. It further alleges that they falsely represented to the market that Citron Research was an independent research outlet that had never received compensation from third parties to publish information about target companies when, in fact, the defendants had entered into compensation arrangements with hedge funds. The SEC’s complaint charges Left and Citron Capital with violating Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The complaint also charges Left with control person liability under Section 20(a) of the Exchange Act for Citron Capital’s violations of Section 10(b) of the Exchange Act. The Complaint seeks remedies against Left and Citron Capital, including permanent injunctions from violations of the charged anti-fraud provisions, conduct-based injunctions, disgorgement, prejudgment interest, civil monetary penalties, an officer-and-director bar, and a penny stock bar. In a parallel action, the Fraud Section of the Department of Justice and the U.S. Attorney’s Office for the Central District of California today announced charges against Left. The SEC’s investigation, which is ongoing, is being conducted by Sarah Nilson and Wendy Pearson and supervised by Finola Manvelian. Carina Chambarry and Michael Barnes in the SEC’s Division of Economic and Risk Analysis and Darren Boerner in the Division of Enforcement’s Market Abuse Unit provided assistance. The litigation will be led by Stephen Kam and Ruth Pinkel and supervised by Doug Miller. The SEC appreciates the assistance of the Financial Industry Regulatory Authority.

U.S. SECURITIES AND EXCHANGE COMMISSION Litigation Release No. 26056 / July 26, 2024 Securities and Exchange Commission v. Andrew Left, and Citron Capital, LLC, No. 2:24-cv-06311 (C.D. Cal. filed July 26, 2024) SEC Charges Andrew Left and Citron Capital for $20 Million Fraud Scheme The Securities and Exchange Commission today announced charges against activist short seller Andrew Left and his firm, Citron Capital LLC, for engaging in a $20 million multi-year scheme to defraud followers by publishing false and misleading statements regarding his supposed stock trading recommendations. The SEC’s complaint alleges that Left, who resides in Boca Raton, Fl., used his Citron Research website and related social media platforms on at least 26 occasions to publicly recommend taking long or short positions in 23 companies and held out the positions as consistent with his own and Citron Capital’s positions. The complaint alleges that following Left’s recommendations, the price of the target stocks moved more than 12 percent on average. According to the SEC’s complaint, once the recommendations were issued and the stocks moved, Left and Citron Capital quickly reversed their positions to capitalize on the stock price movements. As a consequence, Left bought back stock immediately after telling his readers to sell, and he sold stock immediately after telling his readers to buy. The complaint alleges that Left and Citron Capital made several false and misleading statements in connection with the scheme. For example, it alleges that defendants told the market that they would stay long on a target stock until the price hit $65 when, in fact, they immediately began selling the stock at $28. It further alleges that they falsely represented to the market that Citron Research was an independent research outlet that had never received compensation from third parties to publish information about target companies when, in fact, the defendants had entered into compensation arrangements with hedge funds. The SEC’s complaint charges Left and Citron Capital with violating Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The complaint also charges Left with control person liability under Section 20(a) of the Exchange Act for Citron Capital’s violations of Section 10(b) of the Exchange Act. The Complaint seeks remedies against Left and Citron Capital, including permanent injunctions from violations of the charged anti-fraud provisions, conduct-based injunctions, disgorgement, prejudgment interest, civil monetary penalties, an officer-and-director bar, and a penny stock bar. In a parallel action, the Fraud Section of the Department of Justice and the U.S. Attorney’s Office for the Central District of California today announced charges against Left. The SEC’s investigation, which is ongoing, is being conducted by Sarah Nilson and Wendy Pearson and supervised by Finola Manvelian. Carina Chambarry and Michael Barnes in the SEC’s Division of Economic and Risk Analysis and Darren Boerner in the Division of Enforcement’s Market Abuse Unit provided assistance. The litigation will be led by Stephen Kam and Ruth Pinkel and supervised by Doug Miller. The SEC appreciates the assistance of the Financial Industry Regulatory Authority.