US trial exposes social media 'quick buck' short-selling tactics

Key topics:Andrew Left grilled over alleged stock manipulationProsecutors cite tweets used to move markets fastJury hears claims of misleading trades and reports.By Erik Larson.Short seller Andrew Left was grilled by prosecutors about evidence that he published a controversial research report based on incomplete information and bragged about being able to move the market with tweets.Left is accused in the landmark case of using explosive social-media posts about dozens of companies to illegally move their stock and make a quick profit. He took the rare step for a criminal defendant to testify in his own defense on Tuesday, setting up a tense cross examination Wednesday in Los Angeles federal court.“You were just trying to make a quick buck with these trades weren’t you,” Assistant US Attorney Ben Balding asked Left after showing him several old texts and emails in which he boasted he could move a stock..Read more:.FT: Have we passed peak social media?.“I disagree,” said Left, the 55-year-old founder of Citron Research and one of the most prominent short sellers on Wall Street.The judge overseeing the case repeatedly had to remind Left to answer the prosecutor’s questions directly and twice struck his responses from the record. The jury sat impassively and occasionally took notes during the sometimes heated back and forth, which drew several objections from Left’s defense team that were overruled by the judge.The US Justice Department’s case has zeroed in on the conduct of activist short sellers who highlight companies they think are overvalued and can profit if the stock goes down. Trial testimony also has featured some of Left’s long positions. Closing arguments are expected Thursday morning, followed by the start of jury deliberations.Balding started his exchange with Left on Wednesday by peppering him with questions about a 2020 research report in which he accused a nonprofit called Grand Canyon Education of being the “educational Enron,” alleging it failed to make its financial statements public for investors and had a corrupt revenue shifting deal with its nonprofit spinoff, Grand Canyon University.The prosecutor presented evidence that the financial documents Left claimed hadn’t been filed were publicly available on a government website. He also revealed that former US Securities and Exchange Commission Chairman Harvey Pitt, who oversaw the agency during the Enron Corp. scandal, declined an offer by Left’s team to participate in the damning report because he was concerned it could be seen as an attempt to use his reputation to damage a stock based on incomplete information..Read more:.Think twice before trusting financial advice on social media.Balding showed that Left closed almost all of his short position in the education company within two days of his report being published, even as he counseled an associate who helped him with the report to hold his position. Left made about $2.5 million on the stock move caused by his report, while his colleague’s firm lost $2 million.Left disagreed, repeatedly saying “incorrect” to the prosecutor’s questions.Balding also asked Left about his testimony that he was the only investor in Citron Capital. The prosecutor showed the jury a video of a podcast in which Left referred to having multiple investors.“My investors don’t pay me to be right, they pay me to make money,” Left said during the podcast interview. “That’s my directive from my investors.”“Those were your words, weren’t they,” Balding asked Left.“Yes, sir,” he said.Balding also asked Left about his interview with US Postal Inspector Anna Hallstrom, who worked on the government’s case. The inspector asked Left about allegations that he timed his tweets and reports with a hedge fund to maximize their gains on expected price movements, which he denied.“You said you never tell a hedge fund a specific time you publish a report,” Balding said after playing an audio clip of the interview for the jury. Balding then presented evidence that Left shared with a fund “the exact time you’re going to out your tweet and report.”“So what you said to Inspector Hallstrom was not true,” the prosecutor said.“That is not correct,” Left said.Left repeatedly sought to add alternate explanations, after rejecting the prosecutors remarks, but was prevented by the judge from elaborating.Under questioning by his own lawyer Tuesday, Left told jurors that he doesn’t believe there is anything wrong with him profiting from the “price correction” of a stock after he issues a report or tweet about a company he thinks is overvalued or undervalued.Left testified there is no law that bars him from making trades in the minutes and hours after he published social media posts or research reports on them, attempting to undercut a key element of the case made by prosecutors..Read more:. The Economist: Has social media broken the stockmarket?.Left’s tweets, on the platform now called X, have been a key feature in a trial that is examining when statements of opinion cross into market manipulation — a thorny topic with potential implications for Wall Street. Prosecutors say Left’s private communications around the time he was posting his tweets prove that he was telling the public one thing about his trading intentions while allegedly doing the opposite. In his testimony, Left said his public comments about Tesla Inc. and other companies featured in his indictment never contradicted the short or long positions he took in their stocks.The case is US v. Left, 24-cr-456, US District Court, Central District of California (Los Angeles)..© 2026 Bloomberg L.P..Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox every morning on weekdays. Register here.Support South Africa's bastion of independent journalism, offering balanced insights on investments, business, and the political economy, by joining BizNews Premium. Register here.If you prefer WhatsApp for updates, sign up to the BizNews channel here.

US trial exposes social media 'quick buck' short-selling tactics

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