Defense lawyers for convicted activist short seller Andrew Left demanded a mistrial Friday, citing an unusual courtroom error that they say tainted the entire verdict and demanding a rerun of the case that gripped Wall Street.
Left’s legal team spotted that jurors used an out-of-date court form to issue their verdict, which included a count accusing Left of lying to a federal investigator.
Judge Virginia Phillips dismissed that charge weeks earlier, but the jury in Los Angeles federal court convicted Left of it, anyway, and the incorrect documents were posted to the court docket.
Left’s lawyers want a new trial, with a decision on the request expected within the coming weeks.
Left, 55, made his name at Citron Research by betting stock prices would fall and shouting his reasons to the world.
Prosecutors said Left turned that strategy into fraud.
They accused him of running a short-and-distort scheme that reaped more than $21 million from 2018 to 2023.
Authorities said he fired off negative tweets and commentary he did not truly believe, or while secretly unwinding his own bets, to trigger price drops he could exploit for fast gains.
The jury convicted Left on the main count of running a securities-fraud scheme, plus 12 additional counts tied to specific trades in stocks, including Nvidia, Tesla, and Meta.
That’s not including the extra count of lying that the defense said was erroneously left on a court form.
Left was acquitted him on four counts.
During the three-week trial, prosecutors told jurors that Left “tweeted with one hand and traded with the other.”
One assistant US attorney said Left boasted he could “send a stock tumbling with a single tweet” and treated the profits like “taking candy from a baby.”
They described retail investors who followed his calls and suffered heavy losses, including one retired firefighter who lost $110,000 on a single stock.
The case has rattled the short-selling community. Even before the trial ended, some activist investors added heavier legal disclaimers to their reports. Experts warned that a final conviction could push others to stay silent.
“This sets a dangerous precedent for short sellers, who now fear that publishing negative research and exiting trades quickly will trigger federal audits and market manipulation charges,” said Yale accounting professor Frank Zhang.
Sentencing remains scheduled for Aug. 31. Left remains free until then. The lead securities fraud count carries a maximum prison term of 25 years, though judges often impose far lighter sentences.
Right after the verdict, Left said he would appeal.
If the judge grants the mistrial request, prosecutors must start the case over with a new jury. If she denies it, Left’s team will press the mistake on appeal.
A short seller borrows shares of a company, sells them right away at the current price, then buys them back later — ideally cheaper — to return to the lender and keep the profit.
If the price rises, instead, the short seller loses money. Activist short sellers like Left often publish sharp research that flags problems they expect will drive prices down.