"A short-seller cannot kill a company. You can expose a company."
That's what short-seller Andrew Left told the jury from the witness stand at his securities fraud trial on Tuesday.
The founder of Citron Research is accused of deceiving retail investors and manipulating the market through a tweet-and-trade scheme that prosecutors say earned him over $20 million.
Left took the bold step of testifying in federal court in Los Angeles to defend his record, saying his tweets and reports on companies were accurate and that his positions in those stocks were consistent with his public statements. He said he traded around the times of those reports in order to make money.
When asked about why he made some quick trades following his reports, Left said several times, "I'm a trader."
Left's trial has been closely watched because the activity that prosecutors have described — making public statements about a company and then trading — goes to the heart of how activist short sellers operate.
Left denied the prosecution's allegation that he targeted retail investors by focusing on companies that were owned by everyday stock buyers.
"I don't target anyone. The word target is just wrong," he said, adding that he chooses to speak out about a company when he has "something new to add to the dialogue."
Left also defended his trading and negative reports on a cannabis company called Namaste Technologies that has been a major focus of the trial.
The trial of Andrew Left
Billy Banks, a retail investor from Texas, testified during the first week of the trial that he'd lost most of his retirement savings after investing in companies that were criticized by Left, including Namaste.
Left said he wrote about the company because he believed it was a "fraud" and that it was "preying on" people like Banks. He claimed he exposed fraud at Namaste, noting the CEO was terminated a few months after his reports.
"It needed to be said," Left said of his negative tweet on Namaste. "This is what I do."
Left disputed the prosecution's argument that he had major sway over the market.
Addressing a message exchange in which Left told a portfolio manager they could "destroy" Nvidia, he testified that he used "destroy" to mean "do good" on the stock — the way someone might use the word in the context of a video game.
"Nothing about me thinks I can destroy Nvidia," Left said, adding later, "I can't control the markets."
Left hammered down on what's been a key part of the defense's argument — that he shared his honestly held opinions. "This goes to everything that I talk about in the trial: What I write. I believe. I'll defend," he said.
He also addressed an unusual phone call that he made to a federal investigator in 2021, the day a search warrant was executed at his house and the existence of the investigation became widely known. Clips from the call, during which Left answered the investigator's questions about his Citron reports and trades for over an hour, were played in court earlier in the trial.
"I had nothing to hide," Left said when asked why he called the investigator. "I didn't know there was a larger investigation going on for years. Now it sounds naive. I thought I'd just call and clear anything up."
In his hours on the stand, Left often gave long answers and looked directly at the jury as he explained a trading strategy or how he was thinking about a company. The prosecution objected several times on the grounds that Left was sharing a "narrative" rather than answering a question directly, and the judge often sustained.
Left also joked at times. When asked why he sold off some of his long positions on Tesla and Facebook, Left said that his lawyers should've told him years ago to hold, eliciting some laughter. Asked if his predictions about stocks were always right, Left said, "That's the biggest 'no' I've said so far."
Left had said from the start that he wanted to testify at this trial — an unusual occurrence because it subjects the defendant to cross-examination by prosecutors, which is likely to happen Wednesday.
The closely watched trial is in its third week, and the judge is aiming for deliberations to begin late Wednesday or Thursday. Left could face up to 25 years in prison if convicted of the top charge.
On Monday, the defense filed a motion for a mistrial, arguing the prosecution improperly introduced a statement in court from someone who was not called as a witness.
In a motion filed last week, Left's team argued that he should be acquitted without sending the case to the jury because, in his view, the prosecution failed to prove the charges.
"Submitting this case to the jury would have a profound chilling effect on truthful, nonmisleading speech that provides a value to the public markets and the investor community," the motion said.
