In Major DOJ Probe, FBI Seized Computers of Short Seller Andrew Left of Citron Research in 2021
Posted on 02/04/2022
The U.S. Department of Justice (DOJ) is probing the behavior and actions of prominent short sellers and seeing if the behavior was predatory or if insider trading was involved. The investigation was likely catalyzed by the public battle between retail investors in meme stocks like Gamestop (ticker: GME) versus short seller research firms and hedge funds. Often hedge funds purchase research, including research from short sellers like Muddy Waters Research LLC. In 2021, the DOJ conducted a major sweep in the U.S. for potential trading abuses in the short seller space. In early 2021, the Federal Bureau of Investigation (FBI) seized computers from the home of Andrew Left, the founder of Citron Research. Andrew Left is a popular twitter figure and prominent short seller. Citron Research went hard on Gamestop stock back in early 2021. In January 2021, Citron Research disclosed they will no longer publish “short reports”.
Andrew Left in a 2012 report called out China Evergrande Group on its impending insolvency. Left was banned from trading in Hong Kong as a result of the report.
On January 29, 2021, “As of today, Citron Research will no longer be publishing what can be considered as short-selling reports,” Left said in the video.
The DOJ probe ensnared around 20 to 30 short selling firms and participants in the industry. The probe looked at short seller researcher firms such as Nate Andersonand and his company Hindenburg Research, as well as Fraser Perring and his Viceroy Research. The probe also looked at hedge funds such as Melvin Capital Management and founder Gabe Plotkin. Other firms looked at include Kerrisdale Capital Management, Orso Partners (Nate Koppikar), and Sophos Capital Management (Jim Carruthers). Other funds int the probe reported by various news outlets include Toronto-based Anson Funds, Atom Investors, Bonitas Research, Citron Research, Connective Capital Management, Falcon Research, GeoInvesting, Gotham City Research, GrizzlyRock Capital, J Capital Research, Marcus Aurelius Value, Muddy Waters Capital, Oasis Management, Park West Asset Management, QKM, Sabrepoint Capital Management, Silverado Capital, Spruce Point Capital Management, Valiant Capital Management and White Diamond Research.
