Short Seller Challenges SEC on Free Speech: SEC Roundup
By Nicolas Morgan
By Tom Zaccaro
Welcome to SEC Roundup, a bimonthly video series by former Securities and Exchange Commission senior trial counsels Nick Morgan and Tom Zaccaro, founders of the nonprofit advocacy group Investor Choice Advocates Network.
When the SEC and United States Attorney's Office filed charges against Andrew Left last July, the New York Times headline the following day read, "Criminal Charges Against Outspoken Shortseller Unsettles Wall St."
The SEC charged Left with engaging in a $20 million multi-year scheme to defraud followers by publishing false and misleading statements regarding his supposed stock trading recommendations.
While Left, the founder of Citron Research, defends himself in those ongoing cases, his attorney Eric Rosen, a partner at white-collar boutique Dynamis and a former Assistant United States Attorney, recently submitted a rule petition to the SEC seeking regulatory clarity on an issue with First Amendment implications: After publicly commenting on a security, how long must an individual wait to make a trade directionally different from the statement?
Assuming the individual has no access to insider information about the company and that the individual makes no false or defamatory statements about the issuer, one possible answer to the question is that the individual may trade immediately.
But it's not clear the SEC would agree, so Left and Rosen are seeking regulatory clarity from the agency.
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