One of the oddities of modern securities regulation is just how much you can get away with if you crush small investors by touting speculative penny stocks and how much heat you attract if you warn them about the dangers of these dubious stock pumps.
That appears to be what happened to a man named Andrew Left, a short-seller of some note. He’s done some great work over the years alerting the market, often on Twitter, about overvalued stocks and public companies that are outright frauds. He then “shorts” them — an investment technique where you borrow shares of the targeted company, and sell them. You make money, sometimes a lot of it, when you repay the borrow with a stock that has collapsed in value.
Sounds complicated even if it’s not. Short-selling has been around since we’ve had a stock market. Regulators traditionally loved that short-sellers sniffed out stock pumpers — traders who push dubious market fads and unrealistic business models, particularly on unsophisticated investors.
But in the weird stock market of today, Left and people like him are the bad guys, targets of the feds’ crackdown on alleged market abuses.
Left’s legal odyssey underscores the dysfunction of the modern stock market that has and will make small investors the ultimate “bag holders.”
For the full story, you need to go back to January 2021. COVID was still with us. People were in lockdown mode. Online trading became the bread-and-circuses of the day. First-time investors needed research, and...
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