A witness who testified against Andrew Left has himself become involved in an insider trading probe, bringing a new twist to the bombastic short-seller’s fraud conviction.
Left’s lawyers this month asked the judge who oversaw his trial to toss the jury’s verdict convicting him of 13 counts of securities fraud. The trial was irredeemably unfair, they said, because they never had the chance to ask the witness about the investigation and attack his credibility.
“A new trial would probably produce an acquittal,” Left’s lawyers wrote.
In June, a federal jury in Los Angeles found Left guilty of 13 counts of securities fraud. Prosecutors said he deceived investors by using social media and research reports to set target prices for stocks — including Tesla, Nvidia, and Palantir — while quietly trading them at different prices with his own money.
The founder of Citron Research, Left is something of a short-seller celebrity. He placed bets against GameStop at the same time it became a meme stock, which pitted him against some retail traders on social media. For years, he was a fixture on CNBC and Bloomberg, where he shared his views on stock prices.
Left hasn’t been sentenced. In addition to the criminal case, he faces a parallel civil lawsuit from the Securities and Exchange Commission that remains unresolved.
Left’s criminal conviction shook certain corners of Wall Street, which viewed the trial as a referendum on free speech and the legality of activist short-seller tactics. Left, testifying in his own defense at the trial, said that the views he shared about public companies were sincere.
One of the trial’s prosecution witnesses was Daniel Bachus, the CFO of Grand Canyon Education, a publicly traded technology company that provides services to universities. Left’s lawyers say that Bachus was the only witness who testified that Left used his Citron Research reports to lie about a company, not merely omit information.
On August 21 — weeks after the trial ended — Grand Canyon Education placed Bachus on paid administrative leave “in connection with an ongoing governmental investigation” involving a non-employee’s trades of the company’s stock, the company said in an SEC disclosure. The prosecutors in Left’s case referred to it in their own filings as an “insider trading investigation.”
No government agency has publicly accused Bachus or Grand Canyon Education of any misconduct in connection with the investigation. In the SEC disclosure, the company said it wasn’t the focus of the investigation. Representatives for the SEC and for Grand Canyon Education declined to comment. Bachus didn’t respond to Business Insider’s requests for comment.
Left’s lawyers say they should have been informed about the investigation at the time of the trial so that they could cross-examine Bachus and try to convince the jury that he wasn’t a credible witness.
“This evidence would have destroyed the credibility of the government’s only false-statements witness,” they wrote in a filing.
The prosecution team told Left’s lawyers it didn’t learn about the investigation until after the trial was over. It’s not clear which government agency opened the investigation, nor when Bachus or Grand Canyon Education became aware of it. Many of the filings about the issue remained sealed or redacted on the court docket for Left’s case.
In court filings, Justice Department prosecutors said Left’s lawyers overstated Bachus’ role in the short-selling case, which alleged securities fraud involving more than a dozen different public companies. They said Left wanted to conduct “his own shadow investigation into Bachus” to try to discredit him as a witness.
“The law does not permit fishing expeditions in search of a claim,” prosecutors said.
Left declined to comment. Left’s attorney Eric S. Rosen said he could not comment because many relevant documents remained under seal.
A spokesperson for the US Attorney’s office in Los Angeles declined to comment.
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