Prosecutors say Andrew Left worked with hedge funds but didn't disclose it to the public.
They said Left was paid from the profits earned by a hedge fund based on his trade recommendations.
Left's defense said his work with hedge funds was legal and his reports reflected his own views.
Prosecutors in Andrew Left's securities fraud trial say the prominent short-seller wasn't always working alone.
Left, prosecutors said in court on Tuesday, was also working with hedge funds and sharing in some of their trading profits. They accused him of concealing those relationships from retail investors in order to "maintain the illusion of Citron's independence."
In a text message exchange with a hedge fund portfolio manager that was revealed in court on Tuesday, Left described one short trade as taking "candy from a baby," referring to retail investors.
Prosecutors have accused Left, founder of Citron Research and a familiar face on financial TV news shows, of using his prominence to manipulate the market and deceive everyday stock buyers, earning more than $20 million in the process. The trial is examining what a short-seller is allowed to say and do.
Eliza Goldberg, a chief compliance officer at Atom, a Texas-based hedge fund, testified in the Los Angeles federal court on Tuesday that Left was paid more than $2.6 million by the fund for providing trading recommendations.
Prosecutors, who say Left hid that work from retail investors, said some of those payments were made...
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