Citron Research, Wolf of Wall Street
Citron Research is well known for its short selling. It is, formly StockLemon.com, created by Andrew Edward Left (Jewish).
Citron has 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. Despite being sued by multiple companies for the reports he has released, Left claims he has never lost a case in the United States.
Left attended Northeastern University. His first job was with Universal Commodity Corp, a high-pressure commodities brokerage firm that hired salespeople to make cold calls and push "questionable investments." It might remind you the movie "The Wolf of Wall Street". In 1994, Left quit after 9 months. In 1998, when the National Futures Association sanctioned the firm, Left, along with every other former employee, was sanctioned for 3 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.
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 (explained at the end of this post). 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." (sounds familiar? LOL)
In April 1999, Left became president and CEO of Detour Media. He was named director of the company in November 1999. In 2002, his then employer Detour Media sued Left and prevailed on a $25,000 default judgment against him.
Left switched to shorting the stocks full-time, using his own research to publish free reports on firms he feels are overvalued or engaged in fraud. In 2001, he founded StockLemon.com, now known as Citron Research (from 2007). According to Left, he has made profits every year since he started short selling.
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% 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.
In 2015, report on Valeant Pharmaceuticals bringing attention to inflated sales. Valeant fell more than 90 percent from its peak in August 2015, and announced the resignation of longtime CEO Michael Pearson the following March.
Most recently, Left attacked UBNT by calling total frauds. UBNT got a hit of 8% as the reports released on 9/18 (I made a day-trade on that, made 3% profit). you can find the story here
https://www.cnbc.com/2017/09/18/short-seller-andrew-left-targets-ubiquiti-networks.html
This story is still developing. The defense of UBNT seems not that strong.
The most famous case must be EDU (新东方) in 2009 (dropped from $20 to below $10). Muddy Waters Research joined the battle in 2012 (from $30 to below $10). Look at EDU now, around $90.
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 whistle blower, and claimed they were insolvent and the chairman's credentials were false. Later in 2016 A Hong Kong tribunal banned Andrew 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.
Read more: Investment Scams: Bulletin Boards http://www.investopedia.com/university/scams/scams2.asp#ixzz4uC91hwq0
Citron has 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. Despite being sued by multiple companies for the reports he has released, Left claims he has never lost a case in the United States.
Left attended Northeastern University. His first job was with Universal Commodity Corp, a high-pressure commodities brokerage firm that hired salespeople to make cold calls and push "questionable investments." It might remind you the movie "The Wolf of Wall Street". In 1994, Left quit after 9 months. In 1998, when the National Futures Association sanctioned the firm, Left, along with every other former employee, was sanctioned for 3 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.
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 (explained at the end of this post). 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." (sounds familiar? LOL)
In April 1999, Left became president and CEO of Detour Media. He was named director of the company in November 1999. In 2002, his then employer Detour Media sued Left and prevailed on a $25,000 default judgment against him.
Left switched to shorting the stocks full-time, using his own research to publish free reports on firms he feels are overvalued or engaged in fraud. In 2001, he founded StockLemon.com, now known as Citron Research (from 2007). According to Left, he has made profits every year since he started short selling.
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% 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.
Some Highly Publicized Cases
In 2012, report on the legality of operations by Nu Skin Enterprises.In 2015, report on Valeant Pharmaceuticals bringing attention to inflated sales. Valeant fell more than 90 percent from its peak in August 2015, and announced the resignation of longtime CEO Michael Pearson the following March.
Most recently, Left attacked UBNT by calling total frauds. UBNT got a hit of 8% as the reports released on 9/18 (I made a day-trade on that, made 3% profit). you can find the story here
https://www.cnbc.com/2017/09/18/short-seller-andrew-left-targets-ubiquiti-networks.html
This story is still developing. The defense of UBNT seems not that strong.
An Counter Example
Earlier this year, Left also attacked Wayfair in March, calling its business model unsustainable. However, W is doing extremely well after that, stock price is doubled in 6 months.Attacks on Chinese companies
From 2006 to 2011, 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%.The most famous case must be EDU (新东方) in 2009 (dropped from $20 to below $10). Muddy Waters Research joined the battle in 2012 (from $30 to below $10). Look at EDU now, around $90.
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 whistle blower, and claimed they were insolvent and the chairman's credentials were false. Later in 2016 A Hong Kong tribunal banned Andrew 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.
Boiler-room scam
an outbound call center selling questionable investments by telephone. It typically refers to a room where salesmen work using unfair, dishonest sales tactics, sometimes selling penny stocks, private placements or committing outright stock fraud. The term carries a negative connotation, and is often used to imply high-pressure sales tactics and, sometimes, poor working conditions.Bulletin-board scam (BBs)
Fraudsters most often use a pump and dump scheme on BBs by pretending to reveal inside information about big upcoming announcements, great new products, or lucrative contracts. The opposite can be done too. If fraudsters hold a short position in a company, they will try to spread negative rumors in the hope that investors will panic and push prices down.Read more: Investment Scams: Bulletin Boards http://www.investopedia.com/university/scams/scams2.asp#ixzz4uC91hwq0
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