Citron Research Employee Settles Fraud Charges With SEC Over "Two Tweets"

Ryan Choi, an employee of Citron Research, has settled charges with the SEC and paid over $1.8 million for allegedly engaging in a scheme to defraud readers through two tweets. The SEC claims Choi failed to conduct adequate research and due diligence for the tweets, which were buy recommendations issued by Citron Research in December 2020. Choi also traded on the price increases that followed the tweets without adequately disclosing his trading activity. This case is related to the charges against Andrew Left, the head of Citron Research, who faces charges from the DOJ and the SEC for securities fraud. Left's lawyer argues that he has no duty to disclose his private trading intentions and claims the case will fail for six independent reasons. Despite this, the SEC's actions may deter short sellers from sharing their research publicly, which could be detrimental to the financial markets. Andrew Left is known for targeting overvalued companies through his firm Citron Research, but has seen less success in recent years. The case against Left accuses him of making misleading statements about stocks to profit from price moves triggered by his reports. Left's lawyer believes the prosecution is bad for the financial markets, as the government agrees that the public statements were truthful. The outcome of the case may have significant implications for the way short sellers operate and share their research.