This past Tuesday afternoon, I rang up Andrew Left, the high-profile short seller long known for meticulously documenting allegations of alleged corporate malfeasance and placing bets against companies like Valeant Pharmaceuticals, Shopify and Chinese real estate giant Evergrande.
“Hey Charlie, I’m at the airport,” Left said as he picked up. “I’m sitting down, having a vodka.”
Given what had transpired just hours earlier, it wasn’t hard to understand the sitting-down-having-a-vodka part. Late Monday night, after a two-week trial, Left was convicted in Los Angeles federal court of 13 counts of securities fraud.
Prosecutors alleged Left circulated his research on social media and financial TV to move a bunch of stocks and make a ton of money. That constituted market manipulation, they said, and got a jury to agree with them.
It sounds to me like what Wall Street does every day — people who “talk their book” — not to mention all the retail trolls you see on X trying to gin up interest in speculative stuff that loses money. Even so, Left now faces 20 years in prison when he is sentenced in August.
Truth be told, there’s something unsettling in what Left admits he did: Purposely pushing stock prices around to make a quick buck. Big firms have strict rules around trading off research, placing stocks on so-called restricted lists. Reporters like myself don’t buy individual stocks out of fear our reporting will get us jammed up because we can move prices.
Yes, the trading may look fishy, and this type of trading around research reports and public comments has been a legal gray area. Purposely moving stocks can be construed as stock manipulation. Fishy, though, isn’t something that’s supposed to land you in prison for 20 years.
Try telling that to a jury — as Left’s lawyers did. In one day of trading, Left could make more than most of those people earned in a lifetime. It didn’t help that Left made his bones as a short seller. Making money from pushing stocks down in value just doesn’t sit well with most people, even if it means exposing various abuses and is necessary for markets to function properly.
Hellbound and Down 