By Jonathan Stempel
(Reuters) – A federal judge rejected Andrew Left’s bid to dismiss a U.S. Securities and Exchange Commission civil lawsuit accusing the prominent short seller of fraudulently manipulating stock prices, and profiting from trades that contradicted his public statements.
In a decision released on Wednesday, U.S. District Judge Sherilyn Peace Garnett in Los Angeles said reasonable investors would want to know if Left and his firm Citron Research were following their own stock recommendations.
Garnett said the law supports the SEC theory that defendants who declare their trade positions for investors to follow “have a duty to tell the whole truth — namely their underlying intent to trade inconsistently with their published target prices.”
The SEC case is separate from a U.S. Department of Justice criminal case against Left, which he is seeking to dismiss. He has pleaded not guilty.
Short sellers seek to profit from falling stock prices by selling borrowed stocks, and repurchasing shares later to replenish lenders.
Authorities accused Left of using social media and cable TV appearances to promote his views about certain stocks, when he really wanted to profit from quick price changes — down or up — after he spoke.
They said he collected at least $16 million of profit by manipulating prices of stocks such as Nvidia and Tesla over 5-1/2 years, including stocks whose prices he wanted to rise.
James Spertus, a lawyer for Left, said in an interview he was disappointed with Garnett’s decision, and that it should not affect the criminal case.
He also said Left’s trading would not have affected activity in shares of companies with huge market capitalizations.
“The court has to accept all facts as true on a motion to dismiss, so it’s very difficult to prevail at this stage,” he said. “We expect to prevail on a motion for summary judgment once we are allowed to present the true facts.”
Left’s motion to dismiss the criminal case is scheduled for argument on May 5, with a trial date set for March 17, 2026.
(Reporting by Jonathan Stempel in New York; Editing by Sandra Maler)
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