A witness who once testified in the Andrew Left case has now also become involved in an insider trading investigation, adding a new twist to the conviction of this well-known short seller for fraud.
The lawyer for Left requested this month that the judge presiding over his trial revoke the jury's verdict of conviction on 13 charges of securities fraud. They argued that the trial was "fundamentally unfair" because they did not have the opportunity to question this witness regarding this matter at the time and questioned the credibility of the witness.
The lawyer for Left wrote: "A retrial is likely to result in an acquittal."
To some extent, the founder Left is a celebrity in the short-selling world. He bet on the decline of a certain stock while it became a "meme stock" on GameStop, which put him in opposition to some retail traders on social media. Over the years, he has been a regular guest on CNBC and Bloomberg TV, often sharing his views on stock prices.
Left has not yet been sentenced. In addition to the criminal case, he is also facing a parallel civil lawsuit filed by the U.S. Securities and Exchange Commission (SEC), which has not yet been resolved.
The criminal conviction of Left has shaken some corners of Wall Street, and the outside world sees this trial as a test of freedom of speech and the legitimacy of the strategies used by radical short sellers. During the trial, Left testified that his views on listed companies were sincere.
One of the prosecution witnesses is Daniel Bachus, who is the chief financial officer of Grand Canyon Education. The company is a listed technology firm that provides services to universities. The lawyer for Left stated that Bachus is the only witness to testify that Left used Citron Research's reports to lie to a company, rather than merely concealing information.
On August 21st – several weeks after the trial concluded – Grand Canyon Education placed Bachus on paid administrative leave, citing reasons related to “an ongoing government investigation” involving a non-company employee’s trading of the company’s stock. The company stated this in a SEC disclosure document. In the Left case, the prosecution referred to it as an “insider trading investigation” in their own documents.
At present, no government agency has publicly accused Bachus or Grand Canyon Education of any improper conduct in this investigation. In the documents disclosed by SEC, the company stated that it was not the focus of the investigation. Representatives from SEC and Grand Canyon Education both refused to comment. Bachus did not respond to Business Insider's request for a comment.
The lawyer for Left stated that they should have been informed of this investigation during the trial in order to cross-examine Bachus and attempt to convince the jury that he is not a credible witness.
They wrote in a document: "This evidence could have destroyed the credibility of the government’s only witness regarding false statements."
In the case of Left, the prosecution informed the lawyer of Left that they only became aware of this investigation after the trial had concluded. It is still unclear which government agency initiated the investigation, nor is it known when Bachus or Grand Canyon Education became aware of it. Many court documents related to this matter are still sealed or have been redacted.
Prosecutors from the Ministry of Justice stated in court documents that the lawyer for Left exaggerated Bachus's role in this short-selling case. The case accuses Left of engaging in securities fraud against more than a dozen different listed companies. They said that Left intended to conduct “their own shadow investigation” against Bachus in an attempt to undermine his credibility as a witness.
The prosecution stated: 'The law does not permit endless searches in the pursuit of claims.'
Left refuses to comment. The lawyer of Left, Eric S, stated that since many relevant documents are still under seal, he is unable to comment.
A spokesperson for the Los Angeles District Attorney's Office in the United States refused to comment.
