“You’re looking for three things, generally, in a person: Intelligence, energy, and integrity. And if they don’t have the last one, don’t even bother with the first two.” --WEB
Sorry, but some of the SEC claims are indeed valid. Left lied with NVTA and the hedge fund he gave advance notice to. Some of his text messages are pretty damning. Though it's amusing so many fintwitters are dismissing these claims without fully understanding/reading them.
if he turfed all that day then it is difficult. And in bigger difficulty But if he stayed long some time until he gets a better idea then he is still fine.
Is it really changing your mind when you have a "colleague" that will testify about what you communicated to him your intentions and desires were before issuing public statements? From sec complaint:
"93. Between July 25-30, 2019, Left discussed with his colleague his hope to “get stock to 30” and asked “[w]hat can I put in a tweet to juice it[?]”
94. On July 31, 2019, Left again promoted NVTA in a report and tweet as a good investment to buy and reiterated that Citron Research expected NVTA’s stock to sell at $100, tweeting “certain that Invitae is on its way to $100.” Left
represented in the report that he “will continue to stay long until the stock hits at least $65 as we believe it is on its way to $100.”
If Left can find these frauds then i'm sure that the SEC with vastly more resources could also find them. But for some reason they choose not to. In fact in some cases the regulators actively protect frauds - for example Wirecard. So I view activist short sellers as something of a necessary evil. They are bounty hunters who sometimes, maybe often, step over the line but when the cops won't do their job they're the best we have.
I agree that some of the claims will be hard to prove, but there's more to this story. Mike Stathis of AVA Investment Analytics tipped off the SEC on Left in 2018. His complaint focused on Left making payments to Bloomberg to get exposure on their network as some "expert" when he had no credibility. Stathis did a stream on the day the news broke. If you don't know who Mike Stathis is, he's the only person who really predicted the 2008 financial crisis. Look into him. He's isn't politically correct, but he's rarely wrong about anything, especially when it comes to the market and fraud.
Full disclosure, I’ve only read your commentary on the case and I’m not a lawyer. However, I’m happy to be the one who references New York Times Company v. Sullivan. You make the point the DOJ must prove Left intentionally lied. However, this is not the case. The conclusion of New York Times Company v. Sullivan stipulated it is not enough to show that a statement is false for the press to be liable for libel. Instead, the target of the statement must show that it was made with knowledge of or reckless disregard for its falsity.
So, my point here is if Left made false statements that he believed to be true but he was reckless in investigating their legitmacy, Left will be convicted.
I did some research, and now I’m interested in this case. In contrast to a libel case like New York Times Company v. Sullivan, securities fraud carries a much lower burden of proof. To prove securities fraud scienter, need merely be proven by a preponderance of the evidence. Stated otherwise, to prove securities fraud, intent of wrongdoing needs to merely be proven by being more likely than not.
According to the press release, “defendants told the market that they would stay long on a target stock until the price hit $65 when, in fact, they immediately began selling the stock at $28." Clearly, if true, this is a lie, which could have impacted the stock price. Additionally, it sounds like Left commonly traded in and out of positions he alleged had a 70%–100% downside for small gains given his statements. Furthermore, he had arrangements with hedge funds where he would tell them which companies he would post research about in exchange for compensation.
So, in short, you have Left lying about the duration of his trades to influence stock price, selling information to hedge funds, which will paint him as a bad guy, and the bar to being convicted is that Left is more likely than not to have had intent of wrongdoing.
So, I think Left will likely settle or be convicted.
I have been reading Left for years and I was NEVER under the impression that the positions would be kept until the price target was reached.
I have downloaded many of these statements and that is pretty clear. Should compile a full list of his statements on the securities mentioned in the indictment.
The GE one mentioned above for instance specifically disavows the idea that he will keep the trade on.
The criminal case will be more challenging. However, DOJ conviction rates are quite amazing in America.
As far the civil case goes I certainty wouldn't want to step in front of Jury if I was Left. It was recently held that when SEC Seeks Civil Penalties For Securities Fraud defendants are entitled to a jury trial.
Take what I say with a grain of salt though. I'm certainly not a lawyer.
“You’re looking for three things, generally, in a person: Intelligence, energy, and integrity. And if they don’t have the last one, don’t even bother with the first two.” --WEB
Sorry, but some of the SEC claims are indeed valid. Left lied with NVTA and the hedge fund he gave advance notice to. Some of his text messages are pretty damning. Though it's amusing so many fintwitters are dismissing these claims without fully understanding/reading them.
Please read the 58 page sec complaint, particularly page 18 about $nvta.
"Left represented in the report that he “will continue to stay long until the stock hits at
least $65 as we believe it is on its way to $100.”
95. Contrary to their $100 price target and representation that they would
“stay long until the stock hits at least $65,” Left and Citron Capital began selling
stock that very day at prices at or around $27 to $28 and did not continue to stay
long until the stock hit $65.
if he turfed all that day then it is difficult. And in bigger difficulty But if he stayed long some time until he gets a better idea then he is still fine.
He is allowed to change his mind.
Is it really changing your mind when you have a "colleague" that will testify about what you communicated to him your intentions and desires were before issuing public statements? From sec complaint:
"93. Between July 25-30, 2019, Left discussed with his colleague his hope to “get stock to 30” and asked “[w]hat can I put in a tweet to juice it[?]”
94. On July 31, 2019, Left again promoted NVTA in a report and tweet as a good investment to buy and reiterated that Citron Research expected NVTA’s stock to sell at $100, tweeting “certain that Invitae is on its way to $100.” Left
represented in the report that he “will continue to stay long until the stock hits at least $65 as we believe it is on its way to $100.”
If Left can find these frauds then i'm sure that the SEC with vastly more resources could also find them. But for some reason they choose not to. In fact in some cases the regulators actively protect frauds - for example Wirecard. So I view activist short sellers as something of a necessary evil. They are bounty hunters who sometimes, maybe often, step over the line but when the cops won't do their job they're the best we have.
I agree that some of the claims will be hard to prove, but there's more to this story. Mike Stathis of AVA Investment Analytics tipped off the SEC on Left in 2018. His complaint focused on Left making payments to Bloomberg to get exposure on their network as some "expert" when he had no credibility. Stathis did a stream on the day the news broke. If you don't know who Mike Stathis is, he's the only person who really predicted the 2008 financial crisis. Look into him. He's isn't politically correct, but he's rarely wrong about anything, especially when it comes to the market and fraud.
Hi John,
Full disclosure, I’ve only read your commentary on the case and I’m not a lawyer. However, I’m happy to be the one who references New York Times Company v. Sullivan. You make the point the DOJ must prove Left intentionally lied. However, this is not the case. The conclusion of New York Times Company v. Sullivan stipulated it is not enough to show that a statement is false for the press to be liable for libel. Instead, the target of the statement must show that it was made with knowledge of or reckless disregard for its falsity.
So, my point here is if Left made false statements that he believed to be true but he was reckless in investigating their legitmacy, Left will be convicted.
Best,
Endaka Capital
If he is reckless he might be convicted.
But he was right so much of the time that it is going to be hard to prove he is reckless.
The particular cases in the indictment are cases where Left was right.
I did some research, and now I’m interested in this case. In contrast to a libel case like New York Times Company v. Sullivan, securities fraud carries a much lower burden of proof. To prove securities fraud scienter, need merely be proven by a preponderance of the evidence. Stated otherwise, to prove securities fraud, intent of wrongdoing needs to merely be proven by being more likely than not.
According to the press release, “defendants told the market that they would stay long on a target stock until the price hit $65 when, in fact, they immediately began selling the stock at $28." Clearly, if true, this is a lie, which could have impacted the stock price. Additionally, it sounds like Left commonly traded in and out of positions he alleged had a 70%–100% downside for small gains given his statements. Furthermore, he had arrangements with hedge funds where he would tell them which companies he would post research about in exchange for compensation.
So, in short, you have Left lying about the duration of his trades to influence stock price, selling information to hedge funds, which will paint him as a bad guy, and the bar to being convicted is that Left is more likely than not to have had intent of wrongdoing.
So, I think Left will likely settle or be convicted.
I have been reading Left for years and I was NEVER under the impression that the positions would be kept until the price target was reached.
I have downloaded many of these statements and that is pretty clear. Should compile a full list of his statements on the securities mentioned in the indictment.
The GE one mentioned above for instance specifically disavows the idea that he will keep the trade on.
Also for the criminal case they are going to need to prove that beyond reasonable doubt.
The civil case as you say -
The comp arrangements with hedge funds is more problematic - but only because he explicitly denied them at one point.
The criminal case will be more challenging. However, DOJ conviction rates are quite amazing in America.
As far the civil case goes I certainty wouldn't want to step in front of Jury if I was Left. It was recently held that when SEC Seeks Civil Penalties For Securities Fraud defendants are entitled to a jury trial.
Take what I say with a grain of salt though. I'm certainly not a lawyer.
"They don't teach finance in the Sherwood Forest".. timeless.