Andrew Left

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Andrew Left
Born (1970-07-09) July 9, 1970 (age 49)
ResidenceBeverly Hills, California[1]
CitizenshipUnited States
Alma materNortheastern University
OccupationFinancial analyst, financial writer, short seller
Years active1995 – present
OrganizationCitron Research
Known forActivist short selling
Children2
Websitecitronresearch.com

Andrew Edward Left (born July 9, 1970) is an activist short seller, author and editor of the online investment newsletter Citron Research, formerly StockLemon.com.[2][3] Under the name Citron Research, Left publishes reports on firms that he claims are overvalued or are engaged in fraud. Left is known for advising investors on short selling and has often appeared on various media outlets such as CNBC and Bloomberg to talk about his opinions on stocks.[4][5] In 2017, Left was called 'The Bounty Hunter of Wall Street' by The New York Times.[6]

Citron launched 51 investigative reports against S&P 500 companies, between 2009 and 2015, as well as several Chinese companies, citing allegations of pyramid schemes, ineffective products and accounting, or business frauds.[7] In 2016, Left was banned for five years by the Securities and Futures Commission, in Hong Kong, for disclosing false or misleading information, and so inducing transactions under the Securities and Futures Ordinance. Despite being sued by multiple companies for the reports he has released, Left claims he has never lost a case in the United States;[5][8] the National Futures Association sanctioned Left and stated that he “made false and misleading statements to cheat, defraud or deceive a customer in violation of NFA compliance rules.”[9][10]

Early life and career[edit]

Left was born in a Detroit suburb[11] to a Jewish family and later moved with his family to Coral Springs, Florida. He attended Coral Springs High School where he was a member of the debate team and president of the Jewish youth group.[1] He attended Northeastern University in 1993.[12]

Left's first job was with Universal Commodity Corp, a high-pressure commodities brokerage firm that hired salespeople to make cold calls and push "questionable investments."[11] Left quit in March 1994, after 9 months with the company. When the National Futures Association sanctioned the firm in December 1998, Left, along with every other former employee, was sanctioned for three years along with being required to take an ethics-training course as part of the probe into the firm for making false statements to sell commodity futures contracts.[9] The National Futures Association stated Mr. Left “made false and misleading statements to cheat, defraud or deceive a customer in violation of NFA compliance rules.” [10]

Left became active in short selling by the age of 24. He has cited his experience with Universal Commodity Corp as the reason he started short selling stocks promoted by boiler-room scams.[5] When the boiler rooms eventually went out of business, Left started shorting stocks from bulletin-board scams, in which people would send out email blasts saying, "Buy this stock now or you'll miss out."[1]

In April 1999, Left became president and CEO of Detour Media. He was named director of the company in November 1999.[12][13][14] In 2002, his then employer Detour Media sued Left and prevailed on a $25,000 default judgment against him.[15]

Left switched to shorting the stocks full-time,[11] using his own research to publish free reports on firms he feels are overvalued or engaged in fraud.[5] In 2001, he founded StockLemon.com, now known as Citron Research. According to Left, he has made profits every year since he started short selling.[16] He was a keynote speaker at the 2017 and 2018 Harvard Business School Investment Conference.[17][18]

Citron Research[edit]

Left initially started StockLemon.com in 2001 as a self-published blog containing reports on controversial companies. He rebranded the site as Citron Research in 2007.[5][11][19] Left researches and short sells companies he believes to be engaged in fraud, have been suspiciously promoted, or have been mistakenly overpriced by the stock market.[20][21]

According to a Wall Street Journal analysis of 111 Citron short-sale reports spanning from 2001 to 2014, there was an average share-price decline of 42 percent in the year after Left's report was released. Of those shares, 90 were lower one year later while 21 gained, according to data from S&P Capital IQ.[5]

GTX Global Corp. sued Left for defamation after a 2005 article he published through Citron about GTX Global. In 2007, the case was dismissed under California's anti-SLAPP statues which cover writings about publicly traded companies as matters of public interest.[22][23]

In 2008, Left released a report in which he concluded that Home Solutions was not transparent about the company's relationship with American Renaissance. Home Solutions had loaned money to American Renaissance before the "partnership" was disclosed publicly. As a result of Left's research, Home Solutions’ stock plummeted.[24] Starting in 2012, Left published multiple reports about Questcor Pharmaceuticals centered around incorrect labeling of the drug Acthar's ingredients. When Questcor was acquired by Mallinckrodt, Left criticized the new company for continued misconduct.[25] Several of Left's reports have become highly publicized, including a 2012 report on the legality of operations by Nu Skin Enterprises, and a 2015 report on Valeant Pharmaceuticals bringing attention to inflated sales.[7][26]

In October 2015, The Globe and Mail of Toronto, quoted independent research firm 5i Research Inc CEO Peter Hodson, as stating that "What they seem to do quite well is they're able to spin existing facts into a horrible scenario. It reads very badly," and that "Their job as a company is to create the most amount of panic so they and their clients can make the most amount of money." [27]

Valeant Pharmaceuticals[edit]

Left's 2015 report on Valeant Pharmaceutical], later Bausch Health, accused the company of channel stuffing[28] and using sham transactions to inflate drug sales. Left's initial report focused on an investigation launched by Senator Bernie Sanders and Representative Elijah Cummings that examined Valeant's business model of massively spiking the prices of drugs to which it had acquired marketing rights.[29] Left followed up with a report focused on pharmaceutical distributor Philidor RX.[30] Left called for the US Securities and Exchange Commission to investigate the issue and referred to the company as the "Pharmaceutical Enron".[31][32] As a result of the report, Valeant shares dropped after a five-year peak,[33] eventually falling more than 90 percent from its peak in August 2015, and announced the resignation of longtime CEO J. Michael Pearson the following March.[34][35]

Citron's reports on Chinese companies[edit]

Citron Research has published reports on 18 Chinese companies, 16 of which experienced a drop in stock prices, with 15 of them experiencing drops of over 70%.[36] This has caused a collective of Chinese business leaders, including Qihoo 360 CEO Zhou Hongyi (a company that has been targeted by Left), to launch a site called CitronFraud.com (no longer operating).[37] Left sent a legal notice to the 60 Chinese executives involved, seeking an apology, and told Tech In Asia that he is consulting with lawyers and considering legal action in response.[38]

Qihoo 360 has threatened to take legal action against Citron Research, as has former Google China chief Kai-Fu Lee, now the chairman and CEO of Innovation Works.[39][40] In 2012, posted a detailed, point-by-point rebuttal, via Sinocism, to Chinese investment platform Xueqiu.com, which also suggests that Citron had taken advantage of reader unfamiliariarity with ChineseIn 2019, languages and markets. Lee stated that, "Since Citron has already made big bets on these recommendations before their reports are published... Citron’s recommendation doesn’t have to be right; Citron just needs to mislead their readers to follow their recommendations!”[41]

Longtop Financial[edit]

In 2011, Left released a report through Citron about Longtop Financial, a financial software house based in China, accusing it of defrauding shareholdings, over-reporting revenues, and lacking transparency in the company's acquisition process.[42] The report pointed out Longtop's outsized margins and unexplained stock grants and pointed out Longtop's relationship with China's largest banks.[43][44] The company was later issued a Wells Notice of impending criminal charges from the SEC.[45]

2016 SFC sanction[edit]

In 2016, the Hong Kong Securities and Futures Commission accused Left of spreading false and misleading information about Evergrande Real Estate Group Ltd. The trial marks the first legal action of the Securities and Futures Commission against a short seller with ramifications for free speech, according to the judge. Left had been researching Evergrande since 2012 when he received papers from an anonymous whistleblower, and claimed they were insolvent and the chairman's credentials were false.[16] Later in 2016, a Hong Kong tribunal banned Left from trading for five years after publishing “false and/or misleading” claims about China Evergrande Group. Left was ordered to repay HK$1.6 million in trading profits, pay about HK$4 million in legal expenses, and face criminal prosecution if he breaks Hong Kong rules again.[46][47] This decision is currently under appeal.[citation needed]

Jumia[edit]

Citron Research published a report on May 19, 2019 regarding African eCommerce company Jumia, one month after its IPO had resulted in shares values rising about 250 percent. Subsequent to the Citron report, stock value dropped by 50 percent in one week. Citron alleged “material discrepancies” between the IPO filing and a confidential presentation made by Jumia to its investors on October 18, 2018. Citron Research alleged that the company had presented incorrect figures concerning active users, specifically, its percentage of product returned and active customers before the IPO.[48] By August 2019, Jumia was named in several class-action suits related to employee frauds.[49]

Personal life[edit]

Left has two children from his previous marriage. He shares custody of the children with Andrea and Alan E. Salzman.[50]

Philanthropy[edit]

In 2018, following the Stoneman Douglas High School shooting, Left created a scholarship for students of the school. The award will provide five seniors per year between 2018 and 2021 a $10,000 scholarship.[51]

References[edit]

  1. ^ a b c Julia La Roche (November 9, 2015). "Meet the short-seller single-handedly crushing the titans of the hedge fund industry". Business Insider. Retrieved June 5, 2016.
  2. ^ "Drug Maker Questor Down on Short Seller Comments". Reuters. 2012-07-10. Retrieved 2013-11-27.
  3. ^ "Citron Research Vindicated - The Motley Fool Blog". Caps.fool.com. Retrieved 2013-11-27.
  4. ^ Paul R. La Monica (March 2, 2016). "More bad news for Tesla and Elon Musk". CNN. Retrieved September 5, 2016.
  5. ^ a b c d e f Matt Wirz (October 22, 2015). "The 'Short' Who Sank Valeant Stock". The Wall Street Journal. Retrieved June 5, 2016.
  6. ^ Jesse Barron (8 June 2017). "The Bounty Hunter of Wall Street". The New York Times.
  7. ^ a b Oliver Renick; Anna-Louise Jackson; Joseph Ciolli (October 21, 2015). "Ackman Feeling Shortseller's Sting as Citron Sinks Valeant Stock". Bloomberg. Retrieved June 5, 2016.
  8. ^ "Citron's Andrew Left on Life As A Short-Seller". Business Insider. December 9, 2011. Retrieved June 5, 2016.
  9. ^ a b Daniel Bases; David Gaffen (October 21, 2015). "Citron's Left hits nerve with new Valeant broadside". Reuters. Retrieved June 5, 2016.
  10. ^ a b Niall McGee (October 21, 2015). "Who is Citron Research?". The Globe and Mail. Retrieved June 5, 2016.
  11. ^ a b c d Daniel Bases; Ryan Vlastelica; Clare Baldwin; Mark Bendeich (August 5, 2011). "Special report: The "shorts" who popped a China bubble". Reuters. Retrieved June 5, 2016.
  12. ^ a b "Detour Media Group Inc". SEC. December 31, 2000. Retrieved June 5, 2016.
  13. ^ Susan Carpenter (July 3, 2001). "It's Publish and Perish in L.A." Los Angeles Times. Retrieved June 5, 2016.
  14. ^ "Detour Media Launches Detour Custom Publishing". The Write News. June 20, 2000. Retrieved June 5, 2016.
  15. ^ "Detour Media Group Inc - '10QSB' for 3/31/02". SECinfo.com. Retrieved 2015-04-03.
  16. ^ a b Julie Steinberg (March 15, 2016). "The Short Who Got Valeant Right Is on Trial in Hong Kong". Wall Street Journal. Retrieved September 14, 2016.
  17. ^ "2017 Investment Conference".
  18. ^ "Speakers". HBS Investment Conference.
  19. ^ "Evergrande Stock Tumbles on Fraud Accusation - Market Watch". Articles.marketwatch.com. Retrieved 2013-11-27.
  20. ^ "Nu Skin Shares Fall After Short-Seller Questions China Ops - Reuters". In.reuters.com. 2012-08-07. Retrieved 2013-11-27.
  21. ^ Weil, Jonathan (2013-12-05). "Weil on Finance: Carl Icahn's Mug". Bloomberg. Retrieved 2014-02-07.
  22. ^ Martin Samson. "GTX Global Corp. v. Left". Internet Library of Law and Court Decisions. Retrieved September 15, 2016.
  23. ^ "GTX Global Corp. v. Left". Digital Media Law Project. Retrieved September 15, 2016.
  24. ^ Gordon Russell (January 15, 2008). "Disaster rebuilder faces storm of its own". Nola.com. Retrieved September 15, 2016.
  25. ^ Cynthia Koons (November 9, 2015). "Mallinckrodt's $35,000 Drug Is Back in the Spotlight". Bloomberg. Retrieved September 15, 2016.
  26. ^ Yukhananov, Anna (2012-08-16). "Exclusive: Nu Skin told not to use researcher's name". Reuters. Retrieved 2014-02-07.
  27. ^ [https://www.theglobeandmail.com/report-on-business/who-is-citron-research/article26918763/#c-image-0 "Who is Citron Research?" by Niall McGee; The Globe and Mail; OCTOBER 21, 2015.
  28. ^ John Melloy, Everett Rosenfeld (October 21, 2015). "I bought 2M shares of Valeant today; I believe in the company". CNBC. Retrieved September 5, 2016.
  29. ^ Michael Hiltzik (November 3, 2015). "Valeant scandal shows why we need short-sellers in the stock market". Los Angeles Times. Retrieved September 5, 2016.
  30. ^ "Valeant Plunges 30% After Short Seller Citron Research Makes Fraud Allegation". Forbes. Retrieved September 5, 2016.
  31. ^ Fred Imbert (May 17, 2016). "Citron's Andre Left: Yes, I'm long Valeant, but…". CNBC. Retrieved September 5, 2016.
  32. ^ Linette Lopez (March 2, 2016). "The short seller who took down Valeant is out of the stock because it is 'uninvestable'". Business Insider. Retrieved September 5, 2016.
  33. ^ Charles Stein (October 21, 2015). "Bill Ackman among investors feeling Valeant Pharmaceutical Inc's pain with billions erased in stock fall". Financial Post. Retrieved September 5, 2016.
  34. ^ Damon van der Linde (May 18, 2016). "Valeant Pharmaceuticals short seller Andrew Left buying into the company does not signal a turnaround, says analyst". Financial Post. Retrieved September 5, 2016.
  35. ^ Stephen Gandel (March 20, 2016). "What Caused Valeant's Epic 90% Plunge". Fortune. Retrieved September 5, 2016.
  36. ^ iChinaStock (2011-12-09). "Interview With A Deadeye China Short Seller". Business Insider. Retrieved 2014-02-07.
  37. ^ Steven Millward (2012-09-04). "Shit Gets Real, and Personal, as Chinese Business Leaders Slam Short Sellers Citron". Techinasia.com. Retrieved 2014-02-07.
  38. ^ Steven Millward (2012-09-06). "Citron's Andrew Left Defends His China Record". Techinasia.com. Retrieved 2014-02-07.
  39. ^ "Citron steps up fight against Chinese entrepreneurs|Economy|News|WantChinaTimes.com". Wantchinatimes.com. 2012-09-20. Archived from the original on 2014-02-21. Retrieved 2014-02-07.
  40. ^ "Citron Faces Lawsuit from Qihoo and Kai-Fu Lee_ChinaScope Financial | News". Chinascopefinancial.com. 2012-10-11. Retrieved 2014-02-07.
  41. ^ "Prominent Chinese investor Kai-Fu Lee attacks Citron Research over 'ludicrous' search report by JOSH ONG; The Next Web; August 28, 2012.
  42. ^ "Longtop Financial Technologies under fire from research firms". IBS Intelligence. May 16, 2011. Retrieved September 15, 2016.
  43. ^ "Longtop in Trouble:CFO and Auditor Resign". Business Insider. May 23, 2011. Retrieved September 15, 2016.
  44. ^ Eddie Staley (August 19, 2011). "Citron Research Sees Longtop Financial as Potential Takeover Target". Benzinga. Retrieved September 15, 2016.
  45. ^ "Longtop Financial Fraud Investigation Reaches 'Final Step'". Business Insider. August 30, 2011. Retrieved September 15, 2016.
  46. ^ "Hong Kong Bans Short Seller Andrew Left from Market for Five Years". South China Morning Post. October 19, 2016.
  47. ^ Gough, Neil (2016-10-20). "Hong Kong Tribunal Suspends Investor Who Criticized Chinese Firm". The New York Times. ISSN 0362-4331. Retrieved 2019-10-24.
  48. ^ "Subscribe to read". Financial Times. Retrieved 2019-05-15.
  49. ^ "Jumia pain may not be over as shares slump below IPO price" By David Whitehouse; The Africa Report; October 8, 2019.
  50. ^ Carleton English (12 December 2017). "Tycoons Battle Over Kids' $37k-a-Month Child Support Payments". New York Post.
  51. ^ "Broward Education Foundation 2018 Scholarships". Broward Education Foundation.

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