<blockquote><p>“We are not trying to convict a trader for being a trader. We are trying to convict a trader for being a fraudster.”</p></blockquote><p>I felt tremendous sympathy for Andrew Left when prosecutor Ben Balding called Andrew Left a fraudster in the last line of closing arguments.</p><p>Over the last 25 years, Andrew Left has exposed price gouging and fraudulent billing at Valeant Pharmaceuticals, insolvency at China Evergrande, and abusive drug pricing at Mallinckrodt, among many other issues. He is the godfather of activist short selling, and without him markets would have more fraud and fewer skeptics willing to speak publicly.</p><p>So why was the government calling Andrew Left a fraudster?</p><p>In his rebuttal closing argument, Mr. Balding said:</p><blockquote><p>“The literal truth of statements in the tweets is not the issue.”</p></blockquote><p>Mr. Balding added:</p><blockquote><p>“The con is he says a stock is garbage and buys it back at a lower price.”</p></blockquote><p>In short, Mr. Balding argued that Andrew Left “would target a stock, tweet, and trade opposite,” the heart of the government’s case throughout the three-week trial.</p><p>The theory of the prosecution was not about false statements, and the government noted in closing arguments that there need not be any victims to convict Andrew Left of market manipulation and securities fraud.</p><p>In the government’s view, this was a case about half-truths, nefarious intent, and easy money. As the prosecution liked to highlight, “Investors are emotional, like a flock of birds, during trading hours” and Andrew Left would monetize this emotion through sensational statements to move stock prices.</p><p>In my view, Andrew Left’s “fraud” was one that, in aggregate, left his readers wealthier and better informed.</p><p>Above all, the conduct of Andrew Left was in line with industry-standard practices and, in my opinion, less aggressive than other activist short sellers.</p><p>We showed this in <a href="https://thebearcave.substack.com/p/the-unjust-prosecution-of-andrew">Part 1</a> by reviewing the disclaimers of major activist short sellers, which explicitly disclose or imply engaging in the short-term trading pattern for which Andrew Left was criminally prosecuted. This is even more true today, as short activists add new disclosures in light of Andrew Left’s criminal conviction.</p><p>For example, take the public statements from the U.S. Attorney’s Office for the Central District of California and the Department of Justice after Andrew Left’s conviction, with my emphasis in bold:</p><blockquote><p>“He <strong>profited by taking advantage of the intended short-term movement</strong> in the company’s share price caused by his commentary.” (<a href="https://www.justice.gov/usao-cdca/pr/founder-citron-research-found-guilty-scheming-manipulate-stock-market-media-campaigns">Link</a>)</p></blockquote><blockquote><p>“Left often built his positions using <strong>inexpensive, short-dated options contracts</strong> that expired the same day that he published his commentary.” (<a href="https://www.justice.gov/usao-cdca/pr/founder-citron-research-found-guilty-scheming-manipulate-stock-market-media-campaigns">Link</a>)</p></blockquote><blockquote><p>“Left took financial positions in Nvidia, including <strong>short-dated call options that expired three days later</strong>. <strong>Short-dated options can offer quick profits if a stock suddenly moves in the narrow timeframe before expiration.</strong>” (<a href="https://www.justice.gov/usao-cdca/pr/founder-citron-research-found-guilty-scheming-manipulate-stock-market-media-campaigns">Link</a>)</p></blockquote><blockquote><p>“Left established long or short positions in the public company on which he was commenting and prepared to <strong>quickly close those positions post-publication and take profits on the short-term price movement caused by his commentary</strong>.” (<a href="https://www.justice.gov/opa/pr/activist-short-seller-convicted-21m-stock-market-manipulation-scheme">Link</a>)</p></blockquote><blockquote><p>“Left used his advance knowledge and control over the timing of a market-moving event to build his positions <strong>using inexpensive, short-dated options contracts that expired from the same day that he published his commentary to within five days</strong>.” (<a href="https://www.justice.gov/opa/pr/activist-short-seller-convicted-21m-stock-market-manipulation-scheme">Link</a>)</p></blockquote><p>The government views the use of short-term options contracts as inappropriate conduct when publishing market-moving commentary. Yet, use of short-term options is an industry-standard practice among activist short sellers along with short-term trading around reports.</p><p>Don’t take my word for it.</p><p>Just look at the new disclaimer from Jehoshaphat Research on its <a href="https://jehoshaphatresearch.com/wp-content/uploads/2026/06/GIL-Short-Opinion-June-2026-Jehoshaphat-Research.pdf?">short report published two days ago</a>. The disclaimer stated, in part:</p><blockquote><p>“<strong>As is common for short activists, we or our affiliates or partners put money, sometimes including short-dated options, into short positions prior to publishing most (ideally, all) of our theses.</strong> This kind of positioning and risk management can put our interests at odds with yours. We have a lot of bias and incentives, just like any investor of course. Similar to any long-biased investor who publicly speaks about a stock on TV, for instance, there’s no guarantee that we’ll come back and update you when we change our mind about something we’ve said. Once we’ve told the world about a short position in a stock, <strong>we’re probably going to start exiting, or in other words, buying to cover that stock</strong> (although we can’t be certain of this plan in advance, it’s usually what ends up happening and what we expect to happen). There’s even a <strong>decent chance we’ll exit the entire short position on the same day we publish our opinions about it.</strong>” (My emphasis)</p></blockquote><p>Likewise, in a short report published on June 11, 2026, Muddy Waters Research’s disclaimer included a “Left Disclosure” that <a href="https://muddywatersresearch.com/research/2026/mw-is-short-ensg/">stated</a>, in part:</p><blockquote><p>“‘Left Disclosure’: As of the time and date of this report, Muddy Waters is short the securities of, or derivatives linked to The Ensign Group, Inc. (ENSG). <strong>Upon publication, we intend to begin covering a substantial majority – possibly all – of our short positions.</strong>” (My emphasis)</p></blockquote><p>Following Andrew Left’s conviction, Assistant Director Patrick Grandy of the FBI Los Angeles Field Office <a href="https://www.justice.gov/opa/pr/activist-short-seller-convicted-21m-stock-market-manipulation-scheme">said</a>:</p><blockquote><p>“While this conviction cannot make up for the significant and emotional harm he inflicted upon his unwitting investors, <strong>it does send a message to those who may be looking to profit from similar schemes</strong>…”</p></blockquote><p>Yet, the two weeks following Andrew Left’s conviction show the exact opposite. Activist short sellers continue to profit from similar strategies, in large part because clear rules and regulations do not exist.</p><p>If the government does not like immediate trading around reports, why not make a rule or regulation for holding periods or disclosure obligations?</p><p>If the government does not like third-party (“balance sheet partner”) trading around reports, why not make a rule or regulation for balance sheet partners?</p><p>If the government is concerned about “concealed relationships with hedge funds” or the dissemination of third-party work, why not make rules on when activist shorts sellers or public commentators need to disclose their research collaborators?</p><p>Nearly all large activist short sellers trade around reports, use short-term options (or use balance sheet partners that do), and collaborate with third parties on research projects. In addition, the government’s case against Andrew Left doesn’t address many of the more aggressive practices of activist shorts sellers such as transacting in SEC whistleblower case equity or paying sources large amounts for information – because Andrew Left did not engage in these practices.</p><p>These issues should be addressed not through arbitrary and selective criminal prosecutions but through clear rules and regulations.</p><p>Because we have none, our best understanding of the government’s views comes from the trial of Andrew Left.</p><p>Let us revisit courtroom 8C of the First Street Courthouse in downtown Los Angeles. It is Friday, May 22, The Honorable Virginia A. Phillips is still presiding, and a dozen lawyers, thirteen jurors, and one defendant sit before her.</p><p>This article represents my own opinions based on my observations, handwritten notes from the trial, industry knowledge, and conversations with others.</p><p>As Andrew Left took the stand in his defense, he appeared slightly nervous and tense, a first in the ten years I’ve known him. Andrew Left is typically confident, colorful, and comedic, and had been throughout our interactions during the trial. For the first time, I could feel the impact of the five-year case weighing on him.</p><p>Andrew Left<span style="color: rgb(238, 0, 0);"> </span>started with a quick joke to the jurors about how, after two weeks of looking at each other, it was nice to finally talk directly. He became emotional as he acknowledged his supporters in the gallery: his wife, eldest son, and roughly a dozen friends, most from fields outside finance.</p><p>Defense attorney Adam Fee, a dominant presence in the courtroom known for his aggressive cross-examinations, adopted a soft, soothing voice as he began questioning Andrew Left, who introduced himself:</p><blockquote><p>“I research companies and give my opinions on stocks…. Wall Street is very biased. 90% of ratings are buy ratings, there was an opportunity to do contrary research.”</p></blockquote><p>Andrew Left started Citron Research, which operated under the name StockLemon for its first six years, shortly after 9/11 and testified that one of his early advantages was using Google for research. In 2014, Citron Research started publishing long-biased stock ideas, many of which were now the focus of the criminal trial.</p><p>Adam Fee then produced Citron Research’s bullish 2018 Tesla report, displaying it on the monitors in front of all jurors, attorneys, the judge, and on one large TV screen in front of the gallery.</p><p>The <a href="https://web.archive.org/web/20190517133248/https:/citronresearch.com/wp-content/uploads/2018/10/Citron-reverses-opinion-on-Tesla-story-too-compelling-to-ignore.pdf">October 2018 Tesla report</a> began:</p><blockquote><p>“Citron reverses opinion on Tesla. The story has become too compelling to ignore.”</p></blockquote><blockquote><p>“The most challenging part of being a short seller is to constantly check your thesis to make sure nothing has changed. You must let all predispositions and prejudices disappear and stay focused on only the facts.</p><p>It is in that spirit and with a great deal of analysis and due diligence that we can say for the first time, <strong>Citron is long Tesla</strong> as the Model 3 is a proven hit and many of the TSLA warning signs have proven not to be significant.”</p></blockquote><div class="captioned-image-container"><figure><a class="image-link image2 is-viewable-img" href="https://substackcdn.com/image/fetch/$s_!YOup!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F28edfb62-a983-4e3d-a7f6-17bf1f009587_1452x872.png" target="_blank"><div class="image2-inset"><source type="image/webp" /><img alt="" class="sizing-normal" height="872" src="https://substackcdn.com/image/fetch/$s_!YOup!,w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F28edfb62-a983-4e3d-a7f6-17bf1f009587_1452x872.png" width="1452" /><div class="image-link-expand"><div class="pencraft pc-display-flex pc-gap-8 pc-reset"><button class="pencraft pc-reset pencraft icon-container restack-image" tabindex="0" type="button"><svg fill="none" height="20" stroke="var(--color-fg-primary)" stroke-linecap="round" stroke-linejoin="round" stroke-width="1.5" viewBox="0 0 20 20" width="20" xmlns="http://www.w3.org/2000/svg"><g><title></title><path d="M2.53001 7.81595C3.49179 4.73911 6.43281 2.5 9.91173 2.5C13.1684 2.5 15.9537 4.46214 17.0852 7.23684L17.6179 8.67647M17.6179 8.67647L18.5002 4.26471M17.6179 8.67647L13.6473 6.91176M17.4995 12.1841C16.5378 15.2609 13.5967 17.5 10.1178 17.5C6.86118 17.5 4.07589 15.5379 2.94432 12.7632L2.41165 11.3235M2.41165 11.3235L1.5293 15.7353M2.41165 11.3235L6.38224 13.0882"></path></g></svg></button><button class="pencraft pc-reset pencraft icon-container view-image" tabindex="0" type="button"><svg class="lucide lucide-maximize2 lucide-maximize-2" fill="none" height="20" stroke="currentColor" stroke-linecap="round" stroke-linejoin="round" stroke-width="2" viewBox="0 0 24 24" width="20" xmlns="http://www.w3.org/2000/svg"><polyline points="15 3 21 3 21 9"></polyline><polyline points="9 21 3 21 3 15"></polyline><line x1="21" x2="14" y1="3" y2="10"></line><line x1="3" x2="10" y1="21" y2="14"></line></svg></button></div></div></div></a><figcaption class="image-caption">(<a href="https://web.archive.org/web/20190517133248/https:/citronresearch.com/wp-content/uploads/2018/10/Citron-reverses-opinion-on-Tesla-story-too-compelling-to-ignore.pdf">Citron Research October 2018 Tesla report</a>)</figcaption></figure></div><p>The defense also emphasized the last page of the report, which said in part:</p><blockquote><p>“By no means does Citron only trade on publishing stories. We actively manage a book that has been trading Tesla for five years.”</p></blockquote><div class="captioned-image-container"><figure><a class="image-link image2 is-viewable-img" href="https://substackcdn.com/image/fetch/$s_!z4i6!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2Fea86bd98-cd78-4368-85e6-738c021f3660_1280x424.png" target="_blank"><div class="image2-inset"><source type="image/webp" /><img alt="" class="sizing-normal" height="424" src="https://substackcdn.com/image/fetch/$s_!z4i6!,w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2Fea86bd98-cd78-4368-85e6-738c021f3660_1280x424.png" width="1280" /><div class="image-link-expand"><div class="pencraft pc-display-flex pc-gap-8 pc-reset"><button class="pencraft pc-reset pencraft icon-container restack-image" tabindex="0" type="button"><svg fill="none" height="20" stroke="var(--color-fg-primary)" stroke-linecap="round" stroke-linejoin="round" stroke-width="1.5" viewBox="0 0 20 20" width="20" xmlns="http://www.w3.org/2000/svg"><g><title></title><path d="M2.53001 7.81595C3.49179 4.73911 6.43281 2.5 9.91173 2.5C13.1684 2.5 15.9537 4.46214 17.0852 7.23684L17.6179 8.67647M17.6179 8.67647L18.5002 4.26471M17.6179 8.67647L13.6473 6.91176M17.4995 12.1841C16.5378 15.2609 13.5967 17.5 10.1178 17.5C6.86118 17.5 4.07589 15.5379 2.94432 12.7632L2.41165 11.3235M2.41165 11.3235L1.5293 15.7353M2.41165 11.3235L6.38224 13.0882"></path></g></svg></button><button class="pencraft pc-reset pencraft icon-container view-image" tabindex="0" type="button"><svg class="lucide lucide-maximize2 lucide-maximize-2" fill="none" height="20" stroke="currentColor" stroke-linecap="round" stroke-linejoin="round" stroke-width="2" viewBox="0 0 24 24" width="20" xmlns="http://www.w3.org/2000/svg"><polyline points="15 3 21 3 21 9"></polyline><polyline points="9 21 3 21 3 15"></polyline><line x1="21" x2="14" y1="3" y2="10"></line><line x1="3" x2="10" y1="21" y2="14"></line></svg></button></div></div></div></a><figcaption class="image-caption">(<a href="https://web.archive.org/web/20190517133248/https:/citronresearch.com/wp-content/uploads/2018/10/Citron-reverses-opinion-on-Tesla-story-too-compelling-to-ignore.pdf">Citron Research October 2018 Tesla report</a>)</figcaption></figure></div><p>As Andrew Left began talking about his 2018 Tesla report, he became notably more relaxed. He said he became bullish on Tesla after talking to <a href="https://www.linkedin.com/in/adam-ramada-b0836869/">Adam Ramada</a>, a frequent confidant on stock ideas.</p><p>The Tesla report exemplified the three key points for Andrew Left’s defense:</p><p>First, Andrew Left usually got it right. In fact, Tesla is up ~20x since Andrew Left’s bullish report.</p><p>Second, Andrew Left is a trader. The report discloses he trades on reports, actively manages his own portfolio, and can change his mind on positions.</p><p>Third, Andrew Left collaborates with others, not in a malicious way as portrayed by the prosecution, but in a human way. The defense emphasized that creating reports is a collective process often done with a network of people Andrew Left first met on Twitter. On the topic of seeking out expertise, Andrew Left testified:</p><blockquote><p>“If I’m sick, I go to a doctor. If I’m very sick, I go to a specialist.”</p></blockquote><p>During his remaining testimony on Friday, Andrew Left pushed back on the notion that he should talk to the management of the companies he criticized, arguing that all information needed should be in the public domain and that management can fool investors into believing false narratives, such as when he was bullish on Invitae after meeting management. Andrew Left also testified that he made his reports colorful to reflect his personality, unlike Wall Street research which “was boring to read.”</p><p>Adam Fee asked:</p><blockquote><p>“Did you want to affect stock prices?”</p></blockquote><p>Andrew Left responded:</p><blockquote><p>“Yeah”</p></blockquote><p>Andrew Left added that he had never expected his trading to land him in court and maintained that what mattered was the substance of the reports, not his personal trading.</p><p>The first day of Andrew Left’s testimony ended with the strongest point about trading “opposite” his published views. Logically, if Andrew Left was trading “opposite” his published “recommendations,” then his true view must actually be opposite what he wrote. Andrew Left testified, in part:</p><blockquote><p>“<strong>This whole trial ‘opposite’ has not made sense… When I say Tesla is good does that mean I think it’s bad? When I say Namaste is a fraud does that mean I think it’s good?</strong>”</p></blockquote><p>The jury then went on a three-day break for Memorial Day weekend.</p><p>Returning on Tuesday, May 26, Andrew Left seemed fully relaxed and confident. The defense seemed to think his first day of testifying went well. I agreed.</p><p>Early in the day, Adam Fee asked Andrew Left to remember the logic behind the Citron report calling McKesson “complicit in fueling the opioid crisis.”</p><p>As Andrew Left recounted the opioid epidemic, rulings that had labeled Johnson & Johnson a public nuisance, and his theory that similar liability could extend to McKesson, the mood in the jury box visibly shifted. Jurors who had appeared neutral became attentive and, at moments, sympathetic or curious.</p><p>It was one of Andrew Left’s strongest moments on the stand. To my surprise, prosecutors raised few objections, largely allowing the defense to paint its own narrative uninterrupted.</p><p>Adam Fee and Andrew Left then revisited the prosecution’s notion that Andrew Left would trade “opposite” his public commentary.</p><p>Adam Fee asked:</p><blockquote><p>“Is trimming a long position the same as shorting a stock?”</p></blockquote><p>Andrew Left responded:</p><blockquote><p>“Absolutely not… shorting would be the complete opposite.”</p></blockquote><blockquote><p>Fee: “Were you ever long while speaking negatively?”</p></blockquote><blockquote><p>Left: “No”</p></blockquote><blockquote><p>Fee: “Were you ever short while speaking positively?”</p></blockquote><blockquote><p>Left: “No”</p></blockquote><p>Later, Adam Fee asked:</p><blockquote><p><strong>“Were you hoping to make money trading around the report?”</strong></p></blockquote><p>Andrew Left responded:</p><blockquote><p><strong>“Yes, I was.”</strong></p></blockquote><p>Then the defense moved to Cronos and the infamous “candy from a baby” text.</p><p>Andrew Left published a critical report on Cronos Group (NASDAQ: CRON) in August 2018 and tweeted that the company was “ALL HYPE with possible securities fraud.” The Citron Research <a href="https://content.lesaffaires.com/LAF/lacom/cronoscitron300818.pdf">report</a> included a price target of $3.50 per share.</p><div class="captioned-image-container"><figure><a class="image-link image2 is-viewable-img" href="https://substackcdn.com/image/fetch/$s_!UQ6D!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2Fcb0efe1e-87a2-4ebe-aa7e-76e96932a08c_1004x662.png" target="_blank"><div class="image2-inset"><source type="image/webp" /><img alt="" class="sizing-normal" height="662" src="https://substackcdn.com/image/fetch/$s_!UQ6D!,w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2Fcb0efe1e-87a2-4ebe-aa7e-76e96932a08c_1004x662.png" width="1004" /><div class="image-link-expand"><div class="pencraft pc-display-flex pc-gap-8 pc-reset"><button class="pencraft pc-reset pencraft icon-container restack-image" tabindex="0" type="button"><svg fill="none" height="20" stroke="var(--color-fg-primary)" stroke-linecap="round" stroke-linejoin="round" stroke-width="1.5" viewBox="0 0 20 20" width="20" xmlns="http://www.w3.org/2000/svg"><g><title></title><path d="M2.53001 7.81595C3.49179 4.73911 6.43281 2.5 9.91173 2.5C13.1684 2.5 15.9537 4.46214 17.0852 7.23684L17.6179 8.67647M17.6179 8.67647L18.5002 4.26471M17.6179 8.67647L13.6473 6.91176M17.4995 12.1841C16.5378 15.2609 13.5967 17.5 10.1178 17.5C6.86118 17.5 4.07589 15.5379 2.94432 12.7632L2.41165 11.3235M2.41165 11.3235L1.5293 15.7353M2.41165 11.3235L6.38224 13.0882"></path></g></svg></button><button class="pencraft pc-reset pencraft icon-container view-image" tabindex="0" type="button"><svg class="lucide lucide-maximize2 lucide-maximize-2" fill="none" height="20" stroke="currentColor" stroke-linecap="round" stroke-linejoin="round" stroke-width="2" viewBox="0 0 24 24" width="20" xmlns="http://www.w3.org/2000/svg"><polyline points="15 3 21 3 21 9"></polyline><polyline points="9 21 3 21 3 15"></polyline><line x1="21" x2="14" y1="3" y2="10"></line><line x1="3" x2="10" y1="21" y2="14"></line></svg></button></div></div></div></a><figcaption class="image-caption">(<a href="https://content.lesaffaires.com/LAF/lacom/cronoscitron300818.pdf">Citron Research August 2018 Cronos report</a>)</figcaption></figure></div><p>Since Citron published the report, Cronos stock has declined from roughly $10 per share to less than $3 per share and in October 2022 the SEC <a href="https://www.sec.gov/newsroom/press-releases/2022-191">charged Cronos</a> “for improperly accounting for millions of dollars of revenue and for other accounting misconduct.”</p><p>Despite his predictions being correct, the jury ultimately convicted Andrew Left of securities fraud for his commentary and trading around Cronos.</p><p>Part of that decision may have been influenced by Andrew Left’s text messages with Sunny Puri, a portfolio manager at Anson Funds.</p><p>Following his Cronos report, Andrew Left texted Mr. Puri:</p><blockquote><p><strong>“I will short more CRON if we get 10.5”</strong></p></blockquote><blockquote><p><strong>“Now that we know who owns it”</strong></p></blockquote><blockquote><p><strong>“Candy from a baby”</strong></p></blockquote><p>Here is how Assistant Attorney General A. Tysen Duva described the texts, quoted at the top of the Department of Justice’s press release following Andrew Left’s conviction:</p><blockquote><p>“Andrew Left used his expertise to profit at the expense of retail investors, ordinary people who owned the stocks he targeted. He callously boasted that it was like ‘taking candy from a baby.’”</p></blockquote><div class="captioned-image-container"><figure><a class="image-link image2 is-viewable-img" href="https://substackcdn.com/image/fetch/$s_!HayP!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F857a69af-c9f1-4b3b-afe2-c744240b75c0_1508x1192.png" target="_blank"><div class="image2-inset"><source type="image/webp" /><img alt="" class="sizing-normal" height="1151" src="https://substackcdn.com/image/fetch/$s_!HayP!,w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F857a69af-c9f1-4b3b-afe2-c744240b75c0_1508x1192.png" width="1456" /><div class="image-link-expand"><div class="pencraft pc-display-flex pc-gap-8 pc-reset"><button class="pencraft pc-reset pencraft icon-container restack-image" tabindex="0" type="button"><svg fill="none" height="20" stroke="var(--color-fg-primary)" stroke-linecap="round" stroke-linejoin="round" stroke-width="1.5" viewBox="0 0 20 20" width="20" xmlns="http://www.w3.org/2000/svg"><g><title></title><path d="M2.53001 7.81595C3.49179 4.73911 6.43281 2.5 9.91173 2.5C13.1684 2.5 15.9537 4.46214 17.0852 7.23684L17.6179 8.67647M17.6179 8.67647L18.5002 4.26471M17.6179 8.67647L13.6473 6.91176M17.4995 12.1841C16.5378 15.2609 13.5967 17.5 10.1178 17.5C6.86118 17.5 4.07589 15.5379 2.94432 12.7632L2.41165 11.3235M2.41165 11.3235L1.5293 15.7353M2.41165 11.3235L6.38224 13.0882"></path></g></svg></button><button class="pencraft pc-reset pencraft icon-container view-image" tabindex="0" type="button"><svg class="lucide lucide-maximize2 lucide-maximize-2" fill="none" height="20" stroke="currentColor" stroke-linecap="round" stroke-linejoin="round" stroke-width="2" viewBox="0 0 24 24" width="20" xmlns="http://www.w3.org/2000/svg"><polyline points="15 3 21 3 21 9"></polyline><polyline points="9 21 3 21 3 15"></polyline><line x1="21" x2="14" y1="3" y2="10"></line><line x1="3" x2="10" y1="21" y2="14"></line></svg></button></div></div></div></a><figcaption class="image-caption">(<a href="https://www.justice.gov/opa/pr/activist-short-seller-convicted-21m-stock-market-manipulation-scheme">Department of Justice press release</a>)</figcaption></figure></div><p>This is consistent with the prosecution’s arguments during trial: Andrew Left viewed trading against his readers as taking candy from a baby.</p><p>This couldn’t be more wrong. Andrew Left correctly warned retail investors about real risks associated with Cronos. In my view, the texts show Andrew Left’s private view mirrored his public one: Cronos was overvalued. And the texts show that Andrew Left viewed Cronos shareholders, his counterparty, as uninformed and trading against his counterparty, not his readers, was “candy from a baby.”</p><p>In short, Andrew Left and Citron’s readership would make money (or “candy”) betting against the overhyped stock with an uninformed shareholder base.</p><p>Andrew Left testified that after his first Cronos report, he received more than 100 emails he characterized as unintelligent from Cronos shareholders, which furthered his confidence in his bearish Cronos thesis.</p><p>Adam Fee asked:</p><blockquote><p><strong>“Who are you referring to as the baby?”</strong></p></blockquote><p>Andrew Left testified:</p><blockquote><p><strong>“People who invest without doing research… the opposite of my readers”</strong></p></blockquote><p>In a trial overflowing with intellectual dishonesty, “candy from a baby” was the most dishonest point, and one that was widely reported.</p><p>One common pushback among short activists and industry participants is that Andrew Left did not just trade aggressively around reports, an industry-standard practice, but also misrepresented his trading publicly. That is the distinction, in some minds, between normal short activism and criminal market manipulation.</p><p>For example, the <a href="https://www.justice.gov/criminal/media/1436961/dl?inline">Department of Justice superseding indictment</a> highlighted:</p><blockquote><p>“Defendant LEFT placed orders to begin closing out his short CRON position approximately 24 minutes after posting the first tweet. By the close of the trading day, defendant LEFT had a net short exposure of approximately 348,900 shares — a reduction of approximately 61 percent of defendant LEFT’s total pre-CRON tweet position.”</p></blockquote><blockquote><p>“After the close of market, defendant LEFT appeared on CNBC’s ‘Fast Money’… LEFT was directly asked — twice — about his own position in CRON. The host followed up and asked, ‘Are you just as short the stock right now as you were at the beginning of the day?’ Defendant LEFT falsely stated that he only covered a ‘small size’ of his short position in CRON earlier that day when, as defendant LEFT then knew, at the time of his appearance on CNBC, he had already closed more than 60 percent of his pre-tweet positions.”</p></blockquote><div class="captioned-image-container"><figure><a class="image-link image2 is-viewable-img" href="https://substackcdn.com/image/fetch/$s_!5HqC!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F4b9acb48-8ca9-4973-a339-1abd8431f175_1522x1382.png" target="_blank"><div class="image2-inset"><source type="image/webp" /><img alt="" class="sizing-normal" height="1322" src="https://substackcdn.com/image/fetch/$s_!5HqC!,w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F4b9acb48-8ca9-4973-a339-1abd8431f175_1522x1382.png" width="1456" /><div class="image-link-expand"><div class="pencraft pc-display-flex pc-gap-8 pc-reset"><button class="pencraft pc-reset pencraft icon-container restack-image" tabindex="0" type="button"><svg fill="none" height="20" stroke="var(--color-fg-primary)" stroke-linecap="round" stroke-linejoin="round" stroke-width="1.5" viewBox="0 0 20 20" width="20" xmlns="http://www.w3.org/2000/svg"><g><title></title><path d="M2.53001 7.81595C3.49179 4.73911 6.43281 2.5 9.91173 2.5C13.1684 2.5 15.9537 4.46214 17.0852 7.23684L17.6179 8.67647M17.6179 8.67647L18.5002 4.26471M17.6179 8.67647L13.6473 6.91176M17.4995 12.1841C16.5378 15.2609 13.5967 17.5 10.1178 17.5C6.86118 17.5 4.07589 15.5379 2.94432 12.7632L2.41165 11.3235M2.41165 11.3235L1.5293 15.7353M2.41165 11.3235L6.38224 13.0882"></path></g></svg></button><button class="pencraft pc-reset pencraft icon-container view-image" tabindex="0" type="button"><svg class="lucide lucide-maximize2 lucide-maximize-2" fill="none" height="20" stroke="currentColor" stroke-linecap="round" stroke-linejoin="round" stroke-width="2" viewBox="0 0 24 24" width="20" xmlns="http://www.w3.org/2000/svg"><polyline points="15 3 21 3 21 9"></polyline><polyline points="9 21 3 21 3 15"></polyline><line x1="21" x2="14" y1="3" y2="10"></line><line x1="3" x2="10" y1="21" y2="14"></line></svg></button></div></div></div></a><figcaption class="image-caption">(<a href="https://www.justice.gov/criminal/media/1436961/dl?inline">February 2026 Department of Justice Superseding Indictment of Andrew Left</a>)</figcaption></figure></div><p>The August 30, 2018 CNBC interview with Andrew Left on Cronos lasted eight minutes and started at 5:30 pm ET. The relevant portions about trade positioning are transcribed below:</p><div class="youtube-wrap" id="youtube2-hlLLk9CvjbU"><div class="youtube-inner"></div></div><blockquote><p>CNBC Host Melissa Lee: “I have to ask you this right off the bat, are you still short Cronos right now, or did you cover?” (<a href="https://youtu.be/hlLLk9CvjbU?si=TVucppVZoGIDVpDk&t=118">1:58</a>)</p></blockquote><blockquote><p>Andrew Left: “Oh, I am definitely still short the stock, no doubt.” (<a href="https://youtu.be/hlLLk9CvjbU?si=M6VfgdaOSOfHa7Qo&t=124">2:03</a>)</p></blockquote><blockquote><p>Melissa Lee: “Last question Andrew, you’re short, you say you remain short, when did you put that short on and will you take that short down to $3.50?” (<a href="https://youtu.be/hlLLk9CvjbU?si=qnLnTN2nirlY1Vnu&t=556">9:16</a>)</p></blockquote><blockquote><p>Andrew Left: “Oh, I don’t, come on Melissa. <strong>You always ask that question and it’s irrelevant when I put it on or when I’m going to take it off. What’s relevant is the information that’s in the report.</strong>” (<a href="https://youtu.be/hlLLk9CvjbU?si=y5EjUvTwW9izBenE&t=564">9:24</a>)</p></blockquote><blockquote><p>Melissa Lee: “Here’s what’s relevant to people watching. <strong>Are you just as short the stock right now as you were at the beginning of the day?</strong>” (<a href="https://youtu.be/hlLLk9CvjbU?si=3fvUvr_o0NTKxNNR&t=571">9:31</a>)</p></blockquote><blockquote><p>Andrew Left: “Uh, <strong>I took a small size of the position off today.</strong> Yes. But I am still extremely short the stock. I believe the stock trades down to where it was just three weeks ago, $6. And then right down to $3.50.” (<a href="https://youtu.be/hlLLk9CvjbU?si=Zyk8Yr5gxJ7kQ_l5&t=578">9:38</a>)</p></blockquote><p>After reading the indictment and reviewing Andrew Left’s statements, my initial view was that Andrew Left covering 60% of his short position and then telling an interviewer he “took a small size of the position off” is misleading and morally wrong, but not criminal.</p><p>After attending the trial, hearing the defense, and reviewing the evidence, I would argue the Department of Justice’s statements are more misleading than those of Andrew Left.</p><p>The defense disclosed that Andrew Left only reduced his position by 19% compared to his position in the morning, and that the 61% reduction was relative to an intraday position high, not to the initial start-of-day position, as he was asked. In addition, Andrew Left maintained a short position through September 12, 2018, until what appeared to be a short squeeze in the sector, and continued to trade in and out of stocks in the industry.</p><p>Does the prosecution believe that, when the media asks about a position, a trader must provide not just a literally true answer but an answer addressing every reasonable interpretation of the question?</p><p>The natural consequence of prosecuting true, partially misleading, or even false media statements is not more truth, but less public participation and less transparency, which will make an opaque industry even darker.</p><p>With his Cronos report, Andrew Left brought correct information to the market, traded in a manner consistent with other short activists, and disclosed trading around his report when repeatedly asked. Andrew Left got it right.</p><p>The defense also highlighted that Andrew Left was never told by regulators or lawyers that he needed to disclose his trading, filed two whistleblower petitions with the SEC regarding his research, and sought out former SEC Chairman Harvey Pitt to review Citron’s report on Grand Canyon Education. The defense commissioned a review from AlixPartners that found over 90% of Andrew Left’s rapid entries and exits in stocks were not related to published commentary, meaning he privately traded short-term most of the time and not just around public statements. The defense also argued in the one instance where Andrew Left was given money from an outside hedge fund it was not compensation for publishing a report, but instead his share of a trade the fund executed on his behalf because the fund had secured borrow on a hard-to-borrow stock for him. Emails presented by the defense supported this narrative.</p><p>Other issues with the prosecution included alleging Andrew Left caused Facebook’s 8% stock rise on December 26, 2018 when it was actually one of the market’s best days in history, calling Andrew Left a financial advisor when he is not one, fighting to conceal <a href="https://www.nytimes.com/2017/06/08/magazine/the-bounty-hunter-of-wall-street.html">his 2017 New York Times profile</a> which openly disclosed his trading and outside collaborations, alleging he did not care about being right because he profited from short-term stock movements that, in reality, only could occur with a long-term track record of being right, claiming Andrew Left used limit orders maliciously, when he actually used them sparingly, and advancing the spurious notion that giving advance notice of reports was suspicious when it was a natural consequence of collaboration on ideas.</p><p>The bottom line of the defense was:</p><blockquote><p>“Intent to profit is not intent to defraud.”</p></blockquote><p>When the jury was sent to deliberations, I was confident and hopeful the jury would find Andrew Left not guilty on all counts. I was very wrong.</p><p>After the guilty verdict on 13 of 17 counts, one hedge fund manager asked me why I thought Andrew Left lost the trial: where did he lose the case? The truthful answer is I don’t know.</p><p>I viewed Andrew Left’s testimony as one of the strongest parts of his defense, as well as the testimony of defense expert Professor Andrew Verstein. However, the defense’s closing arguments were probably the weakest, poorly delivered and overcomplicated, while the prosecution had superb delivery on closing arguments and kept the narrative simple: Andrew Left traded “opposite” and made millions.</p><p>A cynic may argue abnormalities with the jury. Three of the four alternates were used or dismissed as jurors had to leave for various reasons during the trial. At the start of deliberations, the last alternate notified the court of essential work matters that would interfere with his obligations, and one juror who remained on apparently had a father in the hospital. After nearly three weeks of trial, the jury deliberated for just two full days.</p><p>However, I don’t think poor closing arguments or a rushed jury is what lost the case. To me, what lost the case was that a jury of hardworking, educated Americans saw a man make over $20 million, did not identify with him, did not like the concept of trading around reports, and wanted to send a message that this easy money was wrong.</p><p>I believe you could have put the conduct of almost any other activist short seller on trial and gotten the same verdict.</p><p>How long until we find out who is next?</p><p>Two days ago, a prominent venture capitalist <a href="https://x.com/dan_tmt/status/2067078841751802343?s=20">told Bloomberg</a>, “I will hold my SpaceX shares forever.” What if he doesn’t? What if he sells some in three months? Is that a crime? Who decides?</p><p>What if a CEO speaks bullishly about his company and then sells stock? Almost all do.</p><p>In June 2022, multi-billion-dollar ETF operator ARK Invest published:</p><blockquote><p>“<a href="https://www.ark-invest.com/articles/Valuation-Models/arks-zoom-model">ARK’s Expected Value For Zoom Video Communications In 2026: $1,500 Per Share</a>”</p></blockquote><p>Zoom went on to fall ~20% and now trades for around $87 per share. ARK Invest sold down its Zoom position in 2024, far below its stated price target. Is this securities fraud?</p><p>Should the government monitor everyone’s public statements in the public markets to determine people’s intent?</p><p>Is it better to be wrong, as long as the government believes you had the right intentions?</p><p>In August 2019, one short seller called General Electric “<a href="https://fm.cnbc.com/applications/cnbc.com/resources/editorialfiles/2019/8/15/2019_08_15_GE_Whistleblower_Report.pdf">a bigger fraud than Enron</a>.” Its stock has since risen roughly tenfold.</p><p>In September 2019, another short seller compared Bloom Energy to “<a href="https://hindenburgresearch.com/bloom-energy-a-clean-energy-darling-wilting-to-its-demise/">Theranos or Solyndra</a>.” Its stock has since risen roughly 60x.</p><p>In June 2024, a different short seller called Lasertec Corporation “<a href="https://scorpionreports.s3.us-east-2.amazonaws.com/6920.pdf">a Colossal Fraud and Ticking Time Bomb.</a>” The stock just reached all-time highs.</p><p>None of these were written by Andrew Left, all caused large intraday declines, all were ultimately judged wrong by the market, and none were judged wrong by the government.</p><p>We should have regulations that make it easy to do the right thing, difficult to do the wrong thing, and clear when the line between right and wrong is crossed.</p><p>Andrew Left’s fight is about the right to write, right to speak, and responsibility to combat government overreach.</p><p>Andrew Left was right to tell CNBC he covered some of his Cronos position and has the right to not reveal more than that.</p><p>Andrew Left got Tesla right, and Facebook right, and Nvidia right, and Namaste right, and Cronos right, and Beyond Meat right, and General Electric right.</p><p>If Andrew Left’s conviction stands, then in the eyes of the government it doesn’t matter whether what you write turns out right, what matters is if the government believes you are sincere in what you write. What gives government that right?</p><p>I hope with time the courts will right this wrong and restore the rights of Mr. Left.</p><p><em>Cautious investing to all.</em></p><div><hr /></div><h4><strong>Further Reading</strong></h4><p>“<a href="https://thebearcave.substack.com/p/the-unjust-prosecution-of-andrew">The Unjust Prosecution of Andrew Left (Part 1)</a>” (June 4, 2026)</p><p>“<a href="https://thebearcave.substack.com/p/in-defense-of-andrew-left">In Defense of Andrew Left</a>” (July 29, 2024)</p><div><hr /></div><p><em><strong>This article is not investment advice and represents the opinions of its author, Edwin Dorsey.</strong></em><span> You can reach the author by email at edwin@585research.com or on Twitter </span><a href="https://twitter.com/StockJabber">@StockJabber</a><span>. This article is for subscribers of The Bear Cave newsletter. If this article was forwarded to you, please consider becoming a paid subscriber to receive articles like this twice every month. 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