{"id":44126,"date":"2016-08-14T19:33:56","date_gmt":"2016-08-14T23:33:56","guid":{"rendered":"http:\/\/www.smbtraining.com\/blog\/?p=44126"},"modified":"2016-08-14T19:35:52","modified_gmt":"2016-08-14T23:35:52","slug":"is-citron-research-committing-securities-fraud","status":"publish","type":"post","link":"https:\/\/www.smbtraining.com\/blog\/is-citron-research-committing-securities-fraud","title":{"rendered":"Is Citron Research Committing Securities Fraud?"},"content":{"rendered":"

The Citron Research website has been around for a number of years. It first came to my attention roughly\u00a0five years ago when I was approached with an idea to make short trades based on their blog posts. That idea never panned out as the stocks\u00a0they wrote about weren’t very liquid, and therefore the risk\/reward didn’t make sense to me. Fast forward to 2015 and they were writing about short opportunities in large cap stocks.<\/p>\n

Citron and several others became very vocal about shorting Valeant Pharmaceuticals, a company that was a popular long position among larger hedge funds, and Bill Ackman in particular. Andrew Left<\/a>, the owner\/founder of Citron began making the rounds on financial television and received some notoriety once Valeant stock began to collapse in the fourth\u00a0quarter of 2015. Citron is an unregulated entity so there is no way of knowing how many shares Left was short of VRX or\u00a0when\u00a0he placed his trades.<\/p>\n

In 2016 Left continued to push short ideas in mainstream large cap stocks. He appeared\u00a0on financial television suggesting that\u00a0Tesla, Facebook and recently Valeant once again as shorts. I happen to follow\u00a0all three stocks closely as they are good short term trading vehicles. I believe\u00a0a pattern emerged.\u00a0Left\u00a0would appear on television shortly after a “run up” in a stock and declare that he was short. The stock would immediately trade lower that day and possibly the next.<\/p>\n

Left has been involved in markets for two decades and is well aware that his television appearances will move the stocks that he discusses. There is a famous insider trading case from 1980s, prosecuted by Rudy Giuliani,\u00a0that involved a\u00a0Wall Street Journal<\/a> columnist going to jail for placing trades prior to a market moving catalyst that he would create. Has\u00a0Left’s appearances on CNBC or Bloomberg caused stocks to move\u00a0similar to the WSJ case? Is he placing trades immediately before and after the appearances in violation of the 1934 Securities Act, and the case law derived from that law? That is something for an SEC staff attorney to decide. Here are a few examples for them to consider.<\/p>\n

\"citron<\/a><\/p>\n

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Citron shorting $TSLA<\/a> Supply AND demand problems should take down to $100 by years end. News flow all around does not look good for stock<\/p>\n

\u2014 Citron Research (@CitronResearch) March 1, 2016<\/a><\/p><\/blockquote>\n