GameStop Short Seller’s Deleted Tweets Now Emerge in Lawsuit

August 2, 2024

GameStop short seller’s deleted tweets now emerge in a lawsuit following the events of his surrender to securities fraud charges.

According to the authorities, prominent activist short seller Andrew Left surrendered in Los Angeles last week to face federal criminal charges related to securities fraud.

The 54-year-old, who runs the Citron Capital hedge fund has since been imposed a $4 million bond with $1 million of it collateralized.

Left was also sued by the Securities and Exchange Commission (SEC).

The regulator alleged that Left used his Citron Research website and social media platforms on several occasions to publicly recommend taking long or short positions in 23 companies, and then acted against those positions when the stock moved.

Left appeared on several media outlets, including CNBC, Fox Business, and Bloomberg TV, to discuss his views on stocks — all platforms that have been scrutinized by retail investors.

“Andrew Left took advantage of his readers,” Kate Zoladz, director of the SEC’s Los Angeles regional office, said in a statement.

“He built their trust and induced them to trade on false pretenses so that he could quickly reverse direction and profit from the price moves following his reports.”

The SEC alleged that Left and his firm earned $20 million in “ill-gotten profits” from the practice.

Andrew Left’s indictment details several instances where Left allegedly manipulated stock prices through misleading X posts:

Roku Inc.: On January 8, 2019, Left shorted Roku and then labeled the stock “uninvestible” on X. He later deleted the post and replaced it with a more neutral statement. Hence, prosecutors allege this was an intentional effort to manipulate the stock’s price, from which Left profited $700,000.
Beyond Meat Inc.: In mid-May 2019, Left built a short position in Beyond Meat. On May 17, he posted disparaging remarks about the company on X. This caused a drop in stock price. He quickly closed his position, earning substantial profits within minutes of his post.
American Airlines Group Inc.: On June 5, 2020, Left shorted American Airlines and then posted a negative assessment of the company’s balance sheet. Prosecutors say he closed his position within 43 minutes, making $429,000.
Cronos Group Inc.: Left shorted Cronos Group and posted negative comments about the cannabis company on August 30, 2018. Moreover, he began closing his position shortly after his posts, reducing his pre-tweet position by 61% by the end of the day.
Tesla Inc.: On October 23, 2018, Left promoted his long position in Tesla stock on X, only to sell more than half of his position minutes later, earning $1 million. He continued to sell off his position over the next trading day, making a total profit of $6.6 million.
Nvidia Corp.: On November 20, 2018, Left received a tip and bought Nvidia stock, promoting it on X shortly after. Therafter, he sold all his shares within two hours, making $930,000.
Facebook Inc.: On December 26, 2018, Left bought Facebook shares and posted a favorable analysis two days later. He started selling his shares within hours, making $680,000 in profit.

“Dozens of deleted tweets are now front and center in the US Justice Department’s indictment accusing Andrew Left of manipulating the market,” originally reports Bloomberg.

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Also Read: SEC Now Charges CEO For Whopping $170 Million Fraud Scheme

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GameStop’s Ryan Cohen has now been dragged in a lawsuit for insider trading, and allegedly profiting tens of millions of dollars illegally.

The company formerly known as Bed Bath & Beyond Inc. has sued Ryan Cohen and his company RC Ventures LLC, alleging that they engaged in insider trading and made $47 million in illegal profits.

Cohen is the founder of Chewy Inc. and the chairman and CEO of GameStop Corp. Between January and August 2022, while Cohen and RC Ventures were acting as statutory directors of Bed Bath & Beyond, they allegedly used insider information to make profitable trades in Bed Bath & Beyond’s stock.

The bankrupt Bed Bath & Beyond company claims it is entitled to recover these “short-swing” trading profits under securities law, since Cohen and RC Ventures were acting as directors and also beneficially owned more than 10% of Bed Bath & Beyond’s stock, per Bloomberg.

This lawsuit is part of the company’s broader efforts to recover funds for its creditors as it goes through bankruptcy proceedings.

The company has also sued a New Jersey agency to recover $19 million in tax credits, and is seeking to recover over $300 million in trading profits from another hedge fund involved in a failed financing plan.

RC Ventures is currently the largest shareholder of GameStop, owning an 8.7% stake as of June 2023.

James A. Hunter of Radnor, Pa., represents the plaintiff.

The case is 20230930-DK-BUTTERFLY-I Inc. v. Cohen, S.D.N.Y., No. 1:24-cv-05874, complaint filed 8/1/24.

This is a developing story.

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Also Read: Foreign Markets Are Now Imposing Bans For Illegal Trading

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