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Speaker 1: The short seller Andrew laughed, well known to our audience,

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Speaker 1: who lives in fear of federal investigators showing up at

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Speaker 1: his door, and who has Bloomberg's Tom Schoenberg writes, terrorized

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Speaker 1: more than one hundred companies and riled an army of

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Speaker 1: memestock traders, now lives a life where he feels hunted.

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Speaker 1: Andrew Left, founder of Citron Research, joining us on Zoom

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Speaker 1: in New York City. Andrew, we've been teeing you up.

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Speaker 1: Delighted to have you with us, and as we said,

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Speaker 1: this is our most read story on the Bloomberg. Go

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Speaker 1: back two years when your world changed dramatically. Take us

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Speaker 1: back there when those FBI agents showed up.

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Speaker 2: I wasn't home at the time, but as written about agents,

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Speaker 2: I guess they showed up and they took your computers.

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Speaker 2: So I wasn't there, but someone's at my house.

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Speaker 1: Yes, but your life changed, Yes.

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Speaker 2: Yes, yes, of course you know, whenever there's a DOJ investigation,

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Speaker 2: any form of investigation, you have to take it serious.

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Speaker 2: So despite me not understanding what it was about, I think,

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Speaker 2: of course it changes.

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Speaker 3: Biggest fear here is that prosecutors will try and prove

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Speaker 3: collusion is that right, Is that the one thing that's

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Speaker 3: kind of the worst sin a short seller could commit.

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Speaker 2: I mean, I don't understand what collusion would be. You know,

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Speaker 2: if we're long a stock and I say to you, Hey,

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Speaker 2: I like Apple. Do you like Apple? You like Apple?

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Speaker 2: I'm buying Apple, You're buying Apple. I'm buying Apple. Have

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Speaker 2: we colluded?

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Speaker 3: I don't know. I'm not a lawyer, but I guess

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Speaker 3: that's the kind of market manipulation that they're trying to

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Speaker 3: weed out. Have you seen any of that, even if

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Speaker 3: you're not guilty of it, have you seen any of

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Speaker 3: that in the industry that you essentially have have pioneered here?

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Speaker 2: Yeah, I don't know. I mean when you say collusion,

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Speaker 2: it's a very again, just like like the example I

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Speaker 2: brought up is you know, if two people say I

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Speaker 2: like the stock. I mean, so when you say the collusion,

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Speaker 2: I'll give you an example. I famously did Valiant, the

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Speaker 2: Valiant story. How many people wrote about Valiant, many what

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Speaker 2: tell Us wrote about it also? And during that process,

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Speaker 2: I'm sure many people exchange notes saying, oh did you

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Speaker 2: see this? Oh my god, what about this? Did you

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Speaker 2: see this? When you do homework and you exchange notes

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Speaker 2: to someone. Is that collusion? The opposite side of that is,

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Speaker 2: could you imagine if you didn't speak to anyone on anything,

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Speaker 2: they would say, Well, you didn't speak to anyone. You'd

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Speaker 2: never checked this work with anyone. You did it all

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Speaker 2: by yourself. You didn't want to see if they would

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Speaker 2: possibly you were wrong. So you know, I don't. I

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Speaker 2: guess that's just verbiage.

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Speaker 1: Well, and I guess, as Tom notes in his story,

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Speaker 1: that what the government is looking for is whether firms

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Speaker 1: are acting in concert right, so potentially amplifying a report

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Speaker 1: yours or others impact on a stock. Did you, in

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Speaker 1: any of your cases act in concert with others acting concert?

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Speaker 2: Again? I asked the question, which is I'm if I'm

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Speaker 2: writing if two people buy Apple, and I say to you,

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Speaker 2: I want to make sure my work is right. Next

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Speaker 2: year I had been selling X amount of phones. What

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Speaker 2: about you? And you're checking your work with someone who

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Speaker 2: might also belong with the stock? Uh? You know, to

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Speaker 2: see if your models and why maybe with their model? Okay?

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Speaker 2: Is that working in collusion with somebody? So? Have I

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Speaker 2: ever discussed an idea with another person? I think most

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Speaker 2: people have? You know if you uh?

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Speaker 3: I get it. We're not gonna figure this out here.

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Speaker 2: I don't understand.

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Speaker 3: I get your point. I get your point. The one

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Speaker 3: of the other problems Andrew that people have is, you know,

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Speaker 3: you you started off in a bucket shop, right with

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Speaker 3: people pumping stocks and then dumping them after mom and

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Speaker 3: pop got into it, and the concern I mean no,

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Speaker 3: I'm not saying that you were necessarily the inventor of

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Speaker 3: this idea, but that's kind of famously how you got

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Speaker 3: your start in markets. And people have a problem with

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Speaker 3: pumping up a stock and then getting out of it

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Speaker 3: right away and short sellers, Uh, some of the mechanics

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Speaker 3: are similar in terms of the timing. Right you place

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Speaker 3: your bet, then you make your case, and a lot

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Speaker 3: of times they'll sell out quickly. Is is that you

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Speaker 3: think another one of the concerns that maybe the DOJ has.

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Speaker 2: I mean sure, I don't know their concerns. If the

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Speaker 2: information is correct. You know, I can't tell you how

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Speaker 2: many stocks I've covered too soon have gone much lower

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Speaker 2: and same at the same time. Let's say a stock

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Speaker 2: like game stock. Imagine if I wrote said, hey, game

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Speaker 2: stops are short and I was not able to cover it,

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Speaker 2: but it just goes to three hundred and fifty dollars

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Speaker 2: and I'm not able to cover it, right, you know,

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Speaker 2: So trading, if making money in the market was as

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Speaker 2: easy as knowing the information, it would be a different world.

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Speaker 2: Trading the information, trading the market. Understanding the dynamics beneath

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Speaker 2: the markets mean a lot more. I mean, a couple

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Speaker 2: of years ago, I was short GSX, which is a

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Speaker 2: Chinese the number one percentage gaining on the New York

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Speaker 2: Stock Exchange, which Bill Long from our Chagos manipulated up

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Speaker 2: with Goldman Sachs and Morgan Stanley, as you know when

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Speaker 2: he's been charred, and that stock just kept going up.

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Speaker 2: It was a complete fraud. It kept going up every day.

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Speaker 2: What am I not allowed to cover the stock?

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Speaker 3: So I should jump in just and say that I

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Speaker 3: don't know the details of that, so you know, I

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Speaker 3: don't know if we can. I don't want to make

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Speaker 3: any allegations of fraud against Goldman Sachs and Morgan Stanley

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Speaker 3: or even Bill Wyne.

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Speaker 2: No no, no, no, no no, But I'm saying they were

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Speaker 2: the number one and two shareholders of GSX, which was

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Speaker 2: a Chinese education company which in twenty twenty was the

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Speaker 2: number one gainer on the New York Stock Exchange, which is,

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Speaker 2: you know from our Chagos Bill Wong manipulated the stock hire.

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Speaker 2: That's all I have. Okay, I'm sorry, but let's go on.

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Speaker 1: Well, so what can you tell us about what investigators

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Speaker 1: have wanted to know from you? Specifically?

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Speaker 2: I really can't discuss the details. I don't know. I've

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Speaker 2: not spoken to them. I can't, so I don't know

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Speaker 2: any details what they're looking at. I only know the

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Speaker 2: way I've operated myself for twenty years. I think over

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Speaker 2: twenty years, twenty two years, I've been doing this a

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Speaker 2: high standard. I fought this before, let's say, in China

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Speaker 2: a couple of years ago, like six years ago, with

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Speaker 2: Evergrand I put my opinion out, I wrote it, I

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Speaker 2: went to court in China, I lost, and then literally

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Speaker 2: within months after losing, Evergrant default on their bonds. Everything

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Speaker 2: I said was going to be true happened. So you know,

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Speaker 2: I take. I think I understand the SEC and the

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Speaker 2: DJ have difficult jobs, and they're trying to keep a

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Speaker 2: regulated market. I think the market's did a good job

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Speaker 2: regulating itself. I also think it's very tough to regulate

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Speaker 2: people's opinions. I mean, look Twitter, we look thread now

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Speaker 2: it was one hundred million users in like four or

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Speaker 2: five days. Well, you can't talk about a stock on

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Speaker 2: there if you have a position. I mean, think about that.

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Speaker 2: I think Twitter is all people talking stock positions.

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Speaker 1: So what changed during meme stocks? You write in the

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Speaker 1: story that Tom wrote on you, you said during the

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Speaker 1: run up, during the pandemic and memestocks, you realize something

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Speaker 1: changed when it came to short sellers and you specifically.

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Speaker 2: Well what changed? Well, first of all, what changed is

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Speaker 2: the gamification of the market. So people realize the fact

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Speaker 2: that okay, who cares if the stock's garbage? And who

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Speaker 2: cares if there's a high short interest in the stock,

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Speaker 2: the stock can squeeze higher, and if the higher goes,

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Speaker 2: the higher it can go. So once people understood the

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Speaker 2: gamification of the market, it changed the way you were

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Speaker 2: able to allocate size on short selling. Okay, so you couldn't,

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Speaker 2: you know, you couldn't be all in on a short

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Speaker 2: regardless of how good information you had. You understand, if

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Speaker 2: you knew a complete fraud, you still couldn't say, Okay,

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Speaker 2: I'm putting all my chips on this one. Because people

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Speaker 2: say it doesn't make a difference, now, I mean, or

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Speaker 2: a bad business doesn't.

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Speaker 3: Isn't it also the wrong direction to go because you know,

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Speaker 3: game Stop and AMC are not necessarily flourishing business is

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Speaker 3: that are generating a ton of cash flow? In fact, exactly,

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Speaker 3: there's no reason for GameStop to have brick and mortar stores.

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Speaker 3: I don't get it. I go in sometimes and they're empty.

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Speaker 3: Is it when you and Carson Block and Nate Anderson,

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Speaker 3: when you guys kind of pull back a little bit,

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Speaker 3: doesn't that allow a little bit too much irrational exuberance

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Speaker 3: to flourish in the markets?

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Speaker 2: Uh? Yeah, you know. Similarly you can say that, But

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Speaker 2: then the flip side is as short thillwers bring attention

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Speaker 2: to it and there's a short interest, you get a

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Speaker 2: stock that's wound up that could take off at anytime.

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Speaker 2: Look at game Stop. So you know, the market's become gamified.

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Speaker 2: And that's nothing to do with game Stop, just gamified,

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Speaker 2: meaning people get the fact that, okay, we can you know,

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Speaker 2: the markets can move around the algorithms. To this day,

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Speaker 2: we still don't really know what drove games talked to

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Speaker 2: those levels. Was it, uh you know, was it algorithms

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Speaker 2: or was it retail investors who were buying it at

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Speaker 2: three hundred. I don't know.

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Speaker 3: So hey, listen, there's a movie coming out about it.

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Speaker 1: By the way, we only have about a minute and

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Speaker 1: a half left here. You know, one of the things

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Speaker 1: in this story by Tom Andrew you at one point

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Speaker 1: asked him for a hug.

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Speaker 2: How come Tom said that I was having a rough

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Speaker 2: day personally that day, nothing to do with the market.

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Speaker 2: I had. It's a rough, fendly day. And I was

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Speaker 2: looked at my phone. I was like, oh, God knocked this,

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Speaker 2: and I looked at Tom, and I just I'm an

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Speaker 2: emotional guy, said give me a hug. Well, and you

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Speaker 2: brought that?

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Speaker 1: Can you? Can you?

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Speaker 3: Jess?

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Speaker 1: We've just got about a minute left here. What this

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Speaker 1: has been like on your life and your family, Well.

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Speaker 2: It's been It's been difficult for me obviously. Uh it's

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Speaker 2: it's difficult because I take what I do serious and

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Speaker 2: I treat it with respect and high regard for the law.

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Speaker 2: So I don't even know what to be accused of.

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Speaker 2: So that's been very difficult for me. And obviously, being

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Speaker 2: a patriarch of a family, everything is going to take

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Speaker 2: effect on you know your wife, your kids, and your

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Speaker 2: life around you. So yeah, it's been a difficult, challenging

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Speaker 2: two and a half years and hopefully we get through

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Speaker 2: this sooner than later.

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Speaker 1: Well, and we know you also lost your wife over

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Speaker 1: the last couple of years, so we're sorry to hear

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Speaker 1: about that.

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Speaker 2: Next wife. That's okay, okay, I don't like anyone, okay, exactly.

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Speaker 1: Listen, thanks for your time, We really appreciate it. Andrew Laft,

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Speaker 1: of course joining us here on Bloomberg. He's the founder

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Speaker 1: of sitchun Research. His story, by the way, by our

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Speaker 1: Tom Schoenberg, is the most read on the Bloomberg