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New Activist Reports

BMF Reports published on SELLAS Life Sciences (NASDAQ: SLS — $2.7 billion), a clinical-stage biotech whose nearly $3 billion valuation rests on a still-blinded Phase 3 cancer-vaccine trial. BMF argues the market is mistaking slower-than-expected deaths in a still-blinded trial for proof the vaccine works, when it’s unclear who even received it. It notes the drug advanced on thin early evidence, just ten treated patients versus fifteen historical cases, and pegs downside near 76% if the trial fails. BMF Reports writes:

“SELLAS describes at least 90% statistical power at an assumed hazard ratio of 0.636 with only 80 deaths. Our reconstruction using conventional survival-analysis mathematics produces roughly 51% power, not 90%.”

Fugazi Research published on TEN Holdings (NASDAQ: XHLD — $111 million), an events company whose stock spiked more than 900% in two August weeks while the DOJ and SEC probe its IPO. It argues XHLD is a pump-and-dump headed for a Nasdaq halt, citing underwriter Bancroft Capital, whom Bloomberg linked to a string of “apparent pump-and-dump” deals.

A Value Investors’ Club author laid out a bearish case on Charter Communications (NASDAQ: CHTR — $17.6 billion), warning the company is heading into a difficult stretch while holding about $109 billion of gross debt. With fiber and fixed-wireless rivals pressing both pricing and subscriber volumes, the author argues even a modest dip in EBITDA would hit the heavily leveraged equity hard, as climbing refinancing costs absorb free cash flow and make management’s goal of cutting leverage increasingly unrealistic.

Notable Recent Resignations and Departures

Notable executive departures disclosed in the past week include:

1. Chief Financial Officer of D-Wave Quantum (NYSE: QBTS — $6.3 billion) will retire effective September 2, disclosed with roughly a week’s notice, after about five years in the seat. The exit follows a May 10b5-1 sale of 19% of his stake for $9.1 million.

2. President and Chief Executive Officer of Azenta (NASDAQ: AZTA — $1.4 billion) resigned on August 22 with immediate effect after roughly 23 months in the role, with a sitting director named interim CEO. The life-sciences tools company said the departure was “not the result of any disagreement.”

3. Chief Financial Officer of Amrize (NYSE: AMRZ — $24.4 billion) stepped down effective August 24 after only about 5 months. The company’s chief strategy and M&A officer was named successor.

4. Chief Financial Officer of GE Vernova (NYSE: GEV — $243 billion) will retire, the power-equipment maker disclosed on August 25, after just under three years in the seat.

5. Senior Director of AI Hardware Design for the Dojo and Autopilot programs apparently left Tesla (NASDAQ: TSLA — $1 trillion) after 16 months to join AI startup DensityAI. The exit adds to a run of quiet senior departures at the automaker this year across product, finance, North American sales, and vehicle operations.

Unannounced departures courtesy of Canary Data.

News of the Week

“Nvidia Has Become a Banker to the AI Boom, Putting It on Dangerous Ground” (WSJ)

“Nvidia recently provided backstops that could put it on the hook for some $230 billion in lease obligations and residual-value deals, including a $105 billion backstop for an OpenAI lease in Ohio and potentially up to $125 billion in ‘residual-value support’ for financing deals with Wall Street heavyweights. That support would likely entail Nvidia’s assuring that the value of assets backing loans won’t fall below a predetermined level.”

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The Bear Cave is Not Investment Advice. See Full Disclosures Here. Based on Hunterbrook Media’s reporting, Hunterbrook Capital is short $GOF and $TENB at the time of this publication. Positions may change at any time. Twitter: @BearCaveEmail

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New Activist Reports

Wolfpack Research published on Flotek Industries (NYSE: FTK — $894 million), revealing that the company had not told investors that its $400 million PREPA power contract in Puerto Rico had been cancelled. Days later, the company shared this news in an SEC filing. Wolfpack estimated that this would wipe out over 50% of the company’s backlog. According to Wolfpack, Flotek had been ripped off by a partner whose leader had a criminal record.

Fugazi Research published on Aeva Technologies (NYSE: AEVA — $1.3 billion), calling it “a bleeding startup masquerading as AI.” Fugazi argues Aeva survives on serial partnership announcements and constant dilution, and flags approximately $11.9 million of insider selling into the rally that followed its August AI-data-center announcement. Fugazi writes:

“Aeva has spent nearly a decade announcing lidar partnerships, hemorrhaging capital, and selling stock; the latest hyperscaler optics narrative does not change the math.”

Bristlemoon Research published on Macy’s (NYSE: M — $6 billion) earlier in August, arguing that department stores are “melting ice cubes” that have become “attractive shorts” as their valuations have gotten more expensive. Investors are “over-extrapolating” Macy’s recent comp improvement, Bristlemoon argues, writing that the company may face a new margin headwind driven by transportation inflation.

Notable Recent Resignations or Apparent Departures

Notable executive departures disclosed in the past week include:

1. Chief Executive Officer of L3Harris Technologies (NYSE: LHX — $49.7 billion) departed with immediate effect after the board discovered violations of the company’s Code of Conduct. He had previously been axed as CEO-elect of Lockheed Martin in 2012 over a relationship with a subordinate colleague. The Wall Street Journal wrote this week that women at the company had shared concerns about the CEO’s behavior for “years.”

2. Chief Financial Officer and Chief Accounting Officer of Ameresco (NYSE: AMRC — $1.3 billion) is stepping down in a month, and the General Counsel resigned “effective immediately.” The exits follow an undisclosed VP of Finance departure in May and a 2022 activist short report questioning the company’s accounting.

3. The Chief Operating Officer of Viking Therapeutics (NASDAQ: VKTX — $3.95 billion) disappeared from the company’s website with no further disclosure. The VP of Clinical Operations similarly vanished from the site in February.

4. Chief Financial Officer of Boston Beer (NYSE: SAM — $1.9 billion) informed the company on August 17 that he was stepping down and will leave September 30. The board launched a formal search for a permanent replacement while naming an interim CFO.

5. Chief Operating Officer of Merit Medical Systems (Nasdaq: MMSI — $5.4 billion) gave notice on August 18 of his resignation “for good reason,” effective March 2027, days after the company eliminated his position in a reorganization.

Unannounced departures courtesy of Canary Data.

News of the Week

The Entrepreneur Behind The Bear Cave Newsletter (Raging Capital Ventures)

Edwin Dorsey: In my opinion, DraftKings (NASDAQ: DKNG) is in a lot of long-term trouble because of prediction markets, which have several structural advantages. Many admit users at age 18, can reach customers beyond traditional sportsbook jurisdictions, and are distributed through third-party interfaces such as Robinhood. They also have a superior model often with better prices, no betting limits, and no desire to ban winning bettors.

In addition, prediction markets have billions in VC dollars to spend on acquiring new customers, and some operators, such as Novig, are targeting DraftKings’ core base of recreational bettors.

The competitive dynamic between prediction markets and DraftKings reminds me of Netflix versus Blockbuster in the mid-2000s.

…I imagine a future where an “expert” is someone who consistently outperforms the prediction markets, rather than someone with a certain educational pedigree who sounds smart on TV. I predict that millions of Americans will buy hurricane, flood, or wildfire insurance on prediction markets specialized to their Sub-ZIP codes with resolution based on hyperlocal weather data. I hope valuable data on future markets like “Which degree will be highest paying in 2035?” or “Which cities will have >4% GDP growth?” will help people make better decisions about what to study or where to live.

I’m an active and consistently profitable trader on Kalshi and see tremendous opportunity to build out a successful trading operation, a new prediction market focused newsletter, and prediction market research tools on my platform HighgroundResearch.com.”

Check out Edwin’s prediction market analytics site here.

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The Bear Cave is Not Investment Advice. See Full Disclosures Here. Based on Hunterbrook Media’s reporting, Hunterbrook Capital is short $GOF and $TENB at the time of publication. Positions may change. This article is not investment advice or a recommendation to buy, sell, or hold any security.

BY: Sam Koppelman, Matthew Termine, JD Jean-Jacques

EDITOR: Vikas Kumar

Guggenheim is private, but one of its funds is not. For eight years, GOF has paid shareholders a distribution far above what its portfolio has earned. How? By selling billions of dollars of new shares at a premium to NAV. Now, the premium that powered the machine has collapsed to a discount, amid a federal investigation into Guggenheim’s CEO. Does the distribution finally get slashed?

It’s been a tough year for Mark Walter, the CEO of Guggenheim and billionaire owner of several sports teams (though, seemingly, fewer by the day).

The FBI has seized his devices and also, separately, the phone of a different Guggenheim Investments executive. Federal prosecutors have been investigating Walter’s asset management arm and two insurers he owns through his firm, TWG Global. Earlier this year, a grand jury subpoenaed those insurers over whether billions of dollars of their holdings had gone to Walter’s other companies. One subsequently revised its disclosed exposure to Walter-affiliated entities from $1.4 billion to $17 billion.

This weekend, The Wall Street Journal reported that investigators are focused on four intermediary entities that allegedly funneled insurer loan proceeds back into the empire. The SEC is running a parallel probe. Walter agreed to sell the Lakers roughly a year after buying control of the team.

For the most part, public equity investors have been spectators. Guggenheim is private, as are the insurers.

There is, however, one corner of the Guggenheim complex that trades on the New York Stock Exchange.

It’s a closed-end fund called the Guggenheim Strategic Opportunities Fund ($GOF), and it has a problem of its own.

On the surface, GOF looks pretty boring. Its single largest position is a roughly $240 million block of Fannie Mae mortgage bonds — nearly 10% of net assets, according to the fund’s May 2026 portfolio filing. Its second largest is an S&P 500 index ETF. Behind those sit more than 1,500 positions — corporate bonds, syndicated bank loans, agency mortgages, and CLO debt from managers like Carlyle and Golub. The stuff of a million retirement accounts. But GOF is not a vanilla bond fund: it’s a leveraged multisector credit fund.

According to a former Guggenheim executive, “It was kind of a dumping ground.” He said it was full of “the yieldiest pieces of crap” that were “very illiquid” with “chunky exposure,” adding that it is “hard to adjust when faced with flows.”

He added: “Any client that needed to exit it always had difficulties with that.”

We detail some of these positions below.

The filings back him up. Buried in the fund’s Level 3 book are twin $20 million notes issued by Canadian shell companies, and $23 million of notes GOF bought at issuance from a U.K. shell company that had existed for 12 weeks. These positions are described in more detail below.

Nonetheless, the fund has an almost two-decade track record and an impressive monthly distribution, which has long been a compelling reason to own GOF. Owners are currently paid $0.18 a share per month, or over 20% a year on net asset value.

A GOF spokesperson provided the following statement in response to the Bear Cave’s request for comment: “GOF is a Morningstar 5-Star Rated Fund, backed by a 19-year track record of best-in-class results that we are proud to have delivered for shareholders.”

The craziest part: The distribution has never been cut, even through the financial crisis and pandemic.

That’s a big reason why, at its peak last year, investors paid $1.38 to own every $1.00 of GOF net asset value (NAV).

The problem is that GOF can’t actually afford that distribution. Not with earnings alone, at least.

We went through all 19 years of GOF’s audited financials to figure out how a fund stuffed with bonds pays out like a top-decile hedge fund.

The short version:

Over the past eight fiscal years, GOF distributed $1.74 billion to shareholders. Its portfolio, counting every dollar of income and every realized and unrealized gain, generated only about a third of that in earnings. So how did it fund the distribution?

On a month-end basis, GOF stayed above NAV 125 times in a row from March 2016 through July 2026. That premium gave it a Magic Money Machine: GOF could issue new common shares above NAV, month after month, and use the proceeds from those share sales to fund its dividend.

Guggenheim’s own prospectus says that a portion of share sale proceeds is “usually used to pay distributions” and warns that without continued share sales the fund “may not be able to maintain historical distribution levels for extended periods of time.”

It’s the playbook from Michael Saylor’s (increasingly micro) Strategy. When times are good, it works. (When times are bad, you drop a bitcoin rap video on your earnings call).

The problem is what happens when the premium compresses to the point that GOF’s issuance machine no longer works — a zone GOF entered this month.

That doesn’t just make the old funding model harder. At a thin enough premium (or a negative premium!), the existing funding mechanism of an ATM (at-the-market facility) can shut off entirely.

Under the Investment Company Act of 1940, a closed-end fund like GOF generally cannot issue common shares below NAV without fitting within statutory exceptions or obtaining shareholder approval. And offering expenses — for instance, in GOF’s case, a 2% commission to the broker Cantor Fitzgerald — are deducted from the quoted price when determining if the fund is selling new shares below NAV.

Which leaves Guggenheim’s fund with a question it has rarely had to answer during the premium era: What happens to a distribution that the portfolio has not earned when new share issuance is largely restricted by statute?

That is the question we set out to answer today for paid readers of The Bear Cave.

Disclosure: The Bear Cave is now owned by Hunterbrook Media. Hunterbrook Media’s investment affiliate, Hunterbrook Capital, does not have any positions related in GOF at the time of publication. Positions may change at any time. Please see full disclosures here.

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New Activist Reports

Viceroy Research published on Blue Moon Metals (NASDAQ: BMM / TSX-V: MOON — 670 million CAD), a miner whose flagship is the Nussir copper project in Norway. Viceroy argues the project’s tailings-disposal permit is effectively dead after Norway’s Supreme Court voided a near-identical permit under EU environmental law, with the court finding such permits “cannot… be repaired retrospectively.” Viceroy says management concealed the exposure while raising $156 million through paid stock promotion. The report reads:

“In our view, it is an ideal short: a company centered around a hastily acquired pipe dream, haphazardly held together by a flimsy permit on the brink of folding, and promoted to Canadian retail investors via paid stock promoters who almost exclusively represent shit businesses.”

White Diamond Research published on ZenaTech (NASDAQ: ZENA — $190 million), a cash-burning roll-up that sells drone software. White Diamond alleges a classic related party scheme: A CEO-controlled shell, Epazz, does ZenaTech’s R&D and then sells it back to the company at a huge markup.

Notable Recent Resignations or Apparent Departures

1. President and Chief Strategy Officer at Salesforce (NYSE: CRM — $161 billion) disappeared from the company’s leadership page with no announcement. It’s the newest in a rush of apparent senior exits, on the heels of the Chief Engineering & Customer Success Officer’s abrupt departure roughly a week ago.

2. Executive Vice President, Chief Financial Officer and Treasurer of Kilroy Realty (NYSE: KRC — $4.2 billion) is leaving via a termination without cause, roughly two years after signing his employment agreement in July 2024.

3. Executive Vice President and President, Central Laboratories and International at Labcorp (NYSE: LH — $25.8 billion) resigned after about two years in the role, effective early September.

4. GM of Firefly at Adobe (NASDAQ: ADBE — $105 billion) lasted only eight months before slipping out to launch an “AI-native film studio.” It was one of several fast exits, with the retail and consumer-goods GM gone around the one-year mark and an SVP of AI out earlier this year.

5. President and Chief Operating Officer of Addus HomeCare (NASDAQ: ADUS — $2.2 billion) left the company on August 7 after roughly eleven months in the role. A longtime insider was named interim COO the same day.

Unannounced departures courtesy of Canary Data.

News of the Week

“So, What Exactly Is Mark Walter’s Deal?” (The Ringer)

“The short answer is that it just seems to be Deals, like the way Ken’s job is Beach. [Guggenheim CEO] Walter owns insurance companies and holds holding companies and accumulates big stakes in enterprises like Carvana (huge red flag!) and Beyond Meat… He has a stake in Chelsea football and helped launch the Cadillac (née Andretti) Formula One team. Last spring, through his holding company TWG Global—which he began in 2024 with a guy named Thomas Tull, who founded Legendary Pictures and thinks we might have a shot at resurrecting the dodo bird—he partnered with Palantir to explore opportunities in the realm of AI.”

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The Bear Cave is Not Investment Advice. See Full Disclosures Here. Twitter: @BearCaveEmail

New Activist Reports

Gotham City Research published on Sumitomo Chemical (TSE: 4005 — ¥841 billion) and its listed subsidiary Sumitomo Pharma (TSE: 4506 — ¥580 billion). “We believe this report will be regarded as the best and most impactful work we’ve done in East Asia,” Gotham wrote. The key claim: Sumi Pharma “manipulates receivables” to fuel profits, which Gotham believes hides how levered the companies have become. The upshot, according to Gotham, is that “Sumi Pharma’s FY2025 financial statements are misstated by 116-165 billion” and “financial statements will be restated and the Company will face an investigation.”

J Capital Research released a report on Weibo Corporation (NASDAQ: WB; HKEX: 9898) — saying it “looks like it may be acting as banker to a troubled controlling parent,” the Sina Corporation. J Cap writes: “SINA appears to have led Weibo into detrimental investment decisions where returns have been poor and could now embroil Weibo in a huge new liability.”

A Value Investors Club author, Bismarck, wrote up Bending Spoons (NASDAQ: BSP — $28.3 billion), the new, publicly-traded roll-up of software companies you might have thought were already dead, like AOL and Vimeo. The argument:

“Investors are capitalizing acquisition-driven growth at a premium multiple even though the underlying portfolio appears flat to declining organically, reported organic growth is flattered by a non-standard definition, margins are already unusually high, many assets face AI disruption risk, and rapid dealmaking alongside material control weaknesses raises the risk that earnings quality and acquisition economics are far weaker than the headline numbers suggest.”

Recent Resignations or Apparent Departures

Notable executive departures disclosed in the past week include:

1. SVP, Chief Accounting Officer and interim Chief Financial Officer of Baxter International (NYSE: BAX — $14.3 billion) will resign effective September 15, 2026 after roughly 18 months in the role “to join another company,” which turns out to be rival Cardinal Health, where she’ll serve as Chief Accounting Officer beginning in November.

2. Head of AI Infrastructure at XPeng (NYSE: XPEV — $11.7 billion) left after just two years to join OpenAI as a member of its technical staff, which marks the latest engineering defection from a public company to the AI labs.

3. CFO of York Space Systems (NYSE: YSS — $1.5 billion) is leaving the company right after its earnings next week. The company was the subject of a short report from Wolfpack Research earlier this year.

4. President of McDonald’s USA (NYSE: MCD — $195 billion) is resigning with one day of notice. McDonald’s also removed the Senior Vice President and Chief Development Officer from the leadership page of its website in an apparent undisclosed departure. The Vice President of Operations, the Vice President, Global Product, and the Senior Director, Head of Global Intelligence all appear to have left in undisclosed departures this year. This flag is via Canary Data.

5. President and Chief Executive Officer of Dave & Buster’s Entertainment (NASDAQ: PLAY — $357 million) retired effective August 3, 2026 after roughly 13 months in the role “to spend more time with his family in India.” He was the arcade-restaurant chain’s fourth CEO since 2024. The CFO steps up to replace him.

6. Chief Executive Officer of Flutter Entertainment (NYSE: FLUT - $16 billion) is stepping down at the end of September. The Bear Cave has written extensively about its main competitor, DraftKings, and the threat it faces from prediction markets.

Departures courtesy of Canary Data, one of the best platforms for investment research.

News of the Week

“SEC Establishes Financial Reporting and Accounting Unit in Enforcement Division” (SEC)

“The Securities and Exchange Commission today announced it is establishing a new specialized unit within the Division of Enforcement to provide the dedicated expertise, focus, and capacity to pursue accounting and financial reporting fraud cases as well as general misconduct in the accounting and auditing areas. The Financial Reporting and Accounting Unit will work in close collaboration with staff across all relevant SEC divisions and offices to ensure its approach to enforcing federal securities laws is consistent with the Commission’s policy goals.”

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The Bear Cave

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The Bear Cave is Not Investment Advice. See Full Disclosures Here. Twitter: @BearCaveEmail

By: Sam Koppelman and Dhruv Patel

Editor: Vikas Kumar

The Bear Cave is now owned by Hunterbrook Media. Based on Hunterbrook Media’s reporting, at the time of publication Hunterbrook Capital is short $TENB and long a basket of comparable securities, including $CRWD and $S. Positions may change at any time. This article is not investment advice or any recommendation. See full disclosures on our website.

The need for cybersecurity is accelerating, but legacy vulnerability managers like Tenable ($TENB) seem to be on the wrong side of a revolution.

In addition to AI-equipped hackers deploying new tactics, incumbents face a quadruple threat of competitive pressure: 1) Industry giants like CrowdStrike, SentinelOne, and Microsoft adding vulnerability management to their platforms; 2) AI-native startups innovating and undercutting on price; 3) Open-source models lowering barriers to entry; and 4) Frontier AI companies launching their own products.

Tenable has tried to combat this narrative, partnering with Anthropic and debuting agentic tools to resist obsolescence. Will it work? Or will Tenable be the Chegg of Cyber? Interviews with over a dozen experts indicate vulnerability management is now “commoditized,” “in a serious pickle,” and “permanently impaired.”

Alongside our friends at Citrini Research, we also assigned an undergraduate computer science major and journalist with the task of vibe-coding our own vulnerability management tool, Untenable — which quickly found some important vulnerabilities that a Tenable tool missed.

Tenable did not respond to repeated requests for comment. Its competitor, Qualys ($QLYS), responded: “While traditional scanning and detection have indeed become table stakes, that’s not where we compete anymore… we’re actively managing the mix shift away from the commoditized layer toward outcomes: risk-based prioritization, exploit validation, and remediation.”

The full investigation is available exclusively to paid readers of The Bear Cave.

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AI escaping confinement or trying to infect GitHub. Iranian cyberattackers allegedly breaching American water systems. Hackers stealing Bitcoin from crypto wallets.

With AI-driven threats rising, there are enormous opportunities for many cybersecurity companies, with customers redirecting budgets toward IT security. But according to over a dozen experts The Bear Cave interviewed, one category appears to be most, well, vulnerable: companies that identify (and sometimes remediate) vulnerabilities across websites and other digital surfaces.

“The vulnerability management companies — Qualys, Tenable, Rapid7 — feel genuinely at risk,” said Arpan Punyani, co-founder of Garuda Ventures. “The terminal value of those companies is permanently impaired.”

What happens to profit margins, customer retention, and user growth when competitors and AI agents can identify vulnerabilities that legacy vendors miss?

“The legacy players, especially the public companies, are in a serious pickle,” the founder and former CEO of a large cybersecurity company told us.

Rapid7’s ($RPD) market capitalization has already fallen 90% from its peak to under $700 million. The other two public vulnerability management incumbents — Tenable ($TENB, $4 billion) and Qualys ($QLYS, $6.5 billion) — recently launched agentic AI products. But these companies don’t solely face open-source and in-house alternatives: They’re also threatened by the competitive offerings of cybersecurity giants.

CrowdStrike ($CRWD), Palo Alto Networks ($PANW), and Google ($GOOG), via its acquisition of Wiz, have each begun bundling vulnerability management and application security into their broader security platforms. Microsoft ($MSFT) — which offers enterprise customers a low-cost alternative to vulnerability scanning — launched a system that identifies bugs before attackers can exploit them. In April, Anthropic launched Claude Code Security, which scans entire codebases for vulnerabilities and generates patches, no standalone security vendor required.

Qualys told The Bear Cave: “We are better insulated than a single-product pure-play,” citing its “native patch management capability” and that “organizations do not have to decide between best-of-breed tools and platformization, they can have the best of both worlds with Qualys.”

A wave of startups have also launched to deliver cybersecurity products, built with the help of AI agents.

Tobias Citron, a cybersecurity investor at Primary VC, said the vulnerability management market was already commoditized and has now “just become an even bigger commodity.”

Michael Meis, Associate CISO at The University of Kansas Health System, agreed: vulnerability management “will continue to see business” because it’s mandated in “pretty much every regulation and security framework that exists.” But it will also “face the most pressure to innovate or become a legacy player,” he said. Vulnerability management will be “more commoditized and largely relegated to a checkbox exercise as part of cyber hygiene…”

And if you can check the box with Microsoft or Crowdstrike or another major vendor you already work with — to say nothing of a cheaper, box-checking startup — why choose Tenable?

“There are a handful of start-ups emerging with a direct target to replace Qualys and Tenable,”said Jason Rebholz — a former Chief Information Security Officer (CISO) who co-founded and leads Evoke Security — referring to a new wave of startups.

There’s a lengthy list of potential vulnerability management (VM) competitors:

“The pillar cyber products — endpoint, cloud security, identity (where the enforcement happens) — won’t go anywhere,” said Punyani. “In fact, they probably strengthen.”

But when it comes to vulnerability management, the client decision-makers — typically led by a CISO at larger companies — now need more than basic data and scanning. They also need context for prioritization, translation of data into business risk, and ideally, fast, automated remediation of problems.

Tenable, for its part, appears to be aware of the changing landscape, and the company has invested in products that don’t just identify vulnerabilities but remediate them. One, called Hexa AI, is “built to turn exposure intelligence into coordinated action at machine speed.” Tenable is partnered with Anthropic on the initiative. But as need has ballooned, Tenable’s rate of sequential quarterly revenue growth has declined.

The stakes are extremely high, according to the companies on the frontier.

Earlier in 2026, there was a temporary but sharp sell-off in cybersecurity stocks after Anthropic revealed that its model, Mythos, had identified previously unknown vulnerabilities. After a brief government intervention, Anthropic now sells a Mythos-like model called Fable with strict limits, especially on cybersecurity-related prompts.

Then, in July, an experimental agent at OpenAI escaped a sandboxed containment. The agent exploited a vulnerability in third-party software and orchestrated a sophisticated campaign. It accessed the internet and hacked Hugging Face, an AI tools company with information that the agent wanted.

Soon after, Anthropic announced several of its latest models had engaged in comparable misbehavior. News broke this week of a similar breach at Meta.

In the case of OpenAI’s rogue agent, the victim pivoted away from traditional cybersecurity and eschewed the leading AI companies because their guardrails rendered domestic models insufficient. Hugging Face instead used an open-source AI model from China.

The properties and capabilities that made a Chinese open-source model the right tool for Hugging Face also make it a game-changer for would-be attackers. A new era of AI-enabled, semi- and fully-autonomous cyberattacks will only increase demand for the products of most of the leading public cybersecurity vendors.

Ultimately, though, Citron said of vulnerability management that “Claude’s going to be able to do a lot of and is already able to do a lot of what they do … People just use open-source scanners now and the scanning technology itself is obviously a complete commodity and it’s just become an even bigger commodity with the Claude stuff.”

“You’ll see more of the existing players basically offer that vulnerability management checkbox for you,” one CISO explained. “We’ve already seen CrowdStrike moving into the vulnerability management space. If you’ve already got CrowdStrike on your endpoint… you can get rid of your existing vulnerability management space and still check the regulation checkbox.”

Two sources who previously worked for Tenable said they expect the company to lose business.

“I’m not naive to say that the legacy vulnerability management players are going to die tomorrow, but the reason you see their stock decline, some of it is fear, some of it is real,” said a former Tenable executive. “They’re slowly going to decline.”

Based on Tenable’s quarterly SEC filings, the growth rate has already collapsed, even as Tenable raised its guide this quarter —archetypal of a melting ice cube.

A salesperson at a multibillion-dollar cybersecurity reseller put it bluntly. When he runs CrowdStrike deals, he tells clients to “get rid of your Tenable.”

He says that in the CrowdStrike and SentinelOne deals he works on, those companies ask how much customers are paying for Tenable, and then try to undercut it. Sometimes, a customer will have an allegiance to Tenable because they have a customized Tenable One environment, he said. In other cases, CISOs prefer to “take a line item off my budget” by consolidating.

“I think they’ll lose 50% to CrowdStrike and SentinelOne,” he said, referring to Tenable’s market share.

Tenable didn’t respond to repeated requests for comment. Qualys said that “organizations that might go for these bundled deals are not the type of enterprise customer that we are pitching and winning, which are the complex, heterogeneous, or compliance-heavy environments.”

Qualys pitched itself as “one of the only major vendors that can provide a true platform approach to cyber risk management.” The company’s spokesperson highlighted its competitor to Tenable’s Hexa, called Agent Val, which “does exploit validation to check if a vulnerability is indeed exploitable,” as opposed to “most tools,” which it said “can only check if you have a vulnerability in your environment, but not test it safely, so security teams have to do exploit validation manually.”

“Competitors may flag risk, but Agent Val proves it and proves it’s gone,” said the company.

To figure out the winners and losers of this new AI cybersecurity paradigm, The Bear Cave partnered with Citrini Research, an industry veteran, and a freelance coder to test what’s become possible with open-source tools; and whether Tenable could match up to the new AI tools that are rapidly improving.

We began by testing Tenable — or rather, Untenable: a vibe-coded tool to detect vulnerabilities that Tenable missed.

A former Tenable executive threw down the gauntlet to the latest AI models: “If you would take Opus or Mythos or whatever model it is and compare it nowadays to those of the vulnerability management incumbents, they would lose. But over time it’s only a natural step they would become better and eventually even surpass Tenable.”

Hunterbrook Media journalist and undergraduate software engineer Dhruv Patel picked up that gauntlet for The Bear Cave, testing whether it was time for that “natural step.”

The tl;dr — The Bear Cave didn’t build a better tool than a multi-billion dollar company in a week. That would be pretty ridiculous, though we did get surprisingly close to the product we benchmarked against. And we did not try to compete with Tenable One, the full enterprise stack offered by Tenable. But the vibe-coded tool we spun up found several vulnerabilities that Tenable missed.

More on how that test went — and key takeaways — available exclusively to The Bear Cave’s paid subscribers.

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Today’s special report is a hand‑picked roster of 50 companies The Bear Cave believes are on the losing end of AI disruption.

These businesses span sectors including education, call centers, web traffic monetization, travel, and software. Some are obvious AI losers; many are not. Combined, they represent hundreds of billions in market capitalization all united by one common theme: disruption from AI.

Disclosure: The Bear Cave is now owned by Hunterbrook Media. Hunterbrook Media’s investment affiliate, Hunterbrook Capital, does not have any positions related to this article at the time of publication. Positions may change at any time. Please see full disclosures here.

Let’s dig in.

Call Centers + Business Process Outsourcers

Call centers and business process outsourcers face intense competition from AI, as it can eliminate some customer interactions entirely, automate others, and make the human agents who handle the most complicated matters more productive. In short, if something is simple and unimportant enough to offshore, it is likely a good candidate for AI automation.

Notable AI-powered startups in the space include Decagon, which in January 2026 raised $250 million at a $4.5 billion valuation to build personalized AI customer service. Last year, Decagon added “more than 100 new global enterprise customers, like Avis Budget Group, Block, and Deutsche Telekom.” Other notable AI-powered startups include Wonderful AI, which raised $150 million at a $2 billion valuation in March 2026, Parloa, which raised $350 million at a $3 billion valuation in January 2026 to “automate customer service for large enterprises,” Deepgram, which raised $130 million at a $1.3 billion valuation in January, and PolyAI, shown below:

The Bear Cave believes the following call center and BPO companies will likely face the strongest AI-related headwinds:

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Our next special investigation for paid readers comes out this Thursday, August 6.

New Activist Reports

Spruce Point Capital Management published on China Gold International Resources (TSX: CGG / HKEX: 2099 — CAD $12.5 billion), a Chinese state-backed gold and copper miner. Spruce Point alleges the company is effectively captive to its parent, with roughly 99.6% of revenue coming from related-party sales to China National Gold, and highlights auditor Deloitte’s unexpected resignation.

Pelican Way Research published on REalloys (NASDAQ: ALOY — $600 million), a rare-earth “mine-to-magnet” company that went public through a February 2026 reverse merger. Pelican Way brands it “a painfully stereotypical mining promotion,” noting its flagship Hoidas Lake deposit sold out of a prior owner’s bankruptcy for just $20,024 in 2015. Pelican Way wrote:

“We see no reason for this time to be any different from the rest. Every prior venture touched by this group of promoters has ended in bankruptcy, revocation, or a dead shell, and we believe REalloys shareholders are holding the latest iteration of the same trade.”

Hunterbrook Media published a follow-up on Bloom Energy (NYSE: BE — $60 billion), the solid-oxide fuel-cell maker whose stock climbed roughly 1,000% over the past year on promises to power AI data centers faster than the grid. Drawing on government meter data across four regions, Hunterbrook found the cells fall short of the efficiency, output, and lifespan Bloom has told investors to expect. The Bear Cave is owned and authored by Hunterbrook Media.

Bloom was at one point the largest position of Leopold Aschenbrenner’s Situational Awareness fund.

Recent Resignations or Rumored Departures

Notable executive departures disclosed in the past week include:

1. Chief Financial Officer of Fortrea Holdings (NASDAQ: FTRE — $2 billion) was “placed on a paid leave of absence” three weeks following his appointment to CFO after a court restrained him “from working for the company as Chief Financial Officer.” The order came in a lawsuit filed by the CFO’s prior employer against him and Fortrea, alleging he “violated certain restrictive covenants and retained confidential information belonging to his prior employer.”

2. EVP, Chief Financial Officer and Chief Operating Officer of Warner Music Group (NASDAQ: WMG — $14 billion) “stepped down for personal reasons” on July 31, 2026 — barely 15 months after becoming CFO and less than three months into the added COO role. The company named an acting CFO and “has commenced a search for a new Chief Financial Officer.”

3. SVP, Chief Marketing Officer and Chief Revenue Officer of Unity Software (NYSE: U — $14 billion) was quietly removed from the company’s leadership page after roughly two and a half years. Unity’s VP and Head of Marketing was similarly dropped from the leadership page in February, after nine years, before leaving the company. In the past two weeks, Unity has appointed a new Chief Accounting Officer and one of the company’s independent directors resigned from the board.

4. Senior Vice President of Business Development at Red Cat Holdings (NASDAQ: RCAT — $1.1 billion) left after just five months for a similar role at rival Redwire, in a departure the company did not disclose. Last week, the company’s Chief Revenue Officer was terminated for “cause” after less than two years in the job.

5. VP of Engineering at Fastly (NASDAQ: FSLY — $3.3 billion) jumped ship in an undisclosed departure after just sixteen months with the company. Last month, Fastly’s EVP of Strategy and Operations left in another undisclosed departure. Last summer, Fastly’s CEO and CFO departed.

Unannounced departures courtesy of Canary Data.

News of the Week

“Situational Awareness Down 67% in July in AI Stock Rout” — (The Wall Street Journal)

“Leopold Aschenbrenner’s hedge-fund firm Situational Awareness is down around 67% so far in July after incurring heavy losses on AI stocks…

Situational’s gains earlier in the year were so large that, even including July’s losses, the fund remains up about 80% on the year, the letter said…

Aschenbrenner partially blamed short sellers who targeted the firm’s positions for exacerbating the fund’s losses, the letter said. The letter compared Situational’s experience to a bank run.”

StepStone: Worst Month Ever for Spring Fund?

In July, The Bear Cave and Hunterbrook Media published on StepStone (NASDAQ: STEP — $5.29 billion). Now, StepStone’s signature SPRING fund appears to have just had its worst month in history. Based on SPRING’s annual report, SpaceX represented roughly 20% of the fund at the end of Q1 — combining direct and indirect exposure. Given the initial surge after its IPO (which led to a banner June for SPRING), SpaceX could have represented ~25% (or more) of the SPRING fund as of July 1st.

SPCX drew down 36% in July. That means SPRING, all else equal, might have seen a roughly 8–9% drawdown (if it accurately / quickly remarks the stake). Based on its most recent tear sheet, that would represent SRPING’s biggest drawdown ever — by a factor of more than 15 — which kind of makes sense considering StepStone sets its own marks and rarely marks down its investments since they are not publicly traded. (The fund’s worst month in 44 months of operation appears to have been −0.48%.)

The good news for StepStone: Because it charges fees on marks — rather than realized returns — significant performance fees on the SpaceX gains have already been collected. That’s less good news for the everyday investors in the SPRING fund.

Based on Hunterbrook Media’s reporting, Hunterbrook Capital is short STEP and long a basket of comparable securities at the time of publication. Hunterbrook Capital is also short BE and long a basket of comparable securities. Positions may change at any time. This newsletter is not investment advice or any recommendation. See full disclosures on our website.

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New Activist Reports

Bleecker Street Research published on Lyft (NASDAQ: LYFT — $5.4 billion), the second-largest U.S. ridesharing operator. Bleecker Street alleged Lyft faces “$1.3 to $2.7 billion of exposure from consolidated rideshare sexual-assault litigation” against just $533 million of legal and tax accruals. Because Lyft’s balance sheet holds just $1.7 billion of cash, Bleecker Street claims Lyft will likely need to raise dilutive equity to service its litigation obligations.

Outlier Capital published on Bank OZK (NASDAQ: OZK — $5.5 billion), a commercial-real-estate construction lender. Outlier wrote, in part:

“Management says the bank is late in a long property downturn and expects a few more problem projects over the next 12 to 18 months. OZK has described the cycle as being near its end for years… the repeated extensions are finally reaching their limit. The weakest projects now need real buyers or long-term lenders before owner support and property values give way.”

Recent Resignations

Notable executive departures disclosed in the past week include:

1. SVP of Federal Defense Solutions at Palantir (NASDAQ: PLTR — $295 billion) departed after 14 years, disclosing the June exit only through a LinkedIn update. This caps a string of quiet exits this year as Palantir has faced competition from leading AI labs — with the company’s Head of Enterprise, Head of International Public Sector, and Head of Space departing. In February 2026, Michael Burry of The Big Short fame published on the company’s growing receivables and rising days-sales-outstanding.

2. Chief Technology Officer and Chief Engineer of Archer Aviation (NYSE: ACHR — $3.6 billion) both disappeared from the company’s leadership page with no announcement. The CTO had led engineering at Archer since 2019.

3. Executive Vice President and CFO of Coastal Financial (NASDAQ: CCB — $1.1 billion) is departing after just 10 months. His separation agreement waives advance-notice requirements and requires repayment of a $15,000 signing bonus; the company says the exit is “not related to any disagreements.”

4. Chief Revenue Officer of Red Cat Holdings (NASDAQ: RCAT — $1.2 billion) was terminated for “cause” effective July 23, 2026, after less than two years in the job. Hitchcock sued Red Cat, alleging the firing was retaliatory; the company calls the claims meritless.

5. Senior Vice President and CFO of Lindsay Corporation (NYSE: LNN — $1.2 billion) is “resigning for personal reasons” effective August 31, 2026, less than a year after his October 2025 appointment.

News of the Week

“Momentum Crash Hits YOLO Traders’ Returns by Most in Four Years” (Bloomberg)

“Retail traders’ obsession with whatever is the next hot thing in the market — often associated with the acronym YOLO for ‘you only live once’ — is misfiring in a month when momentum went from the market’s darling to its punching bag…

The selloff took a toll on how active that amateur traders are in the stock market. Weekly rolling net buying of individual stocks has fallen to the lowest level since the Covid-19 pandemic, according to Vanda Research.”

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New Activist Reports

White Diamond Research published on RTB Digital (NASDAQ: RTB — $222 million), an AI and crypto-focused enterprise media platform. White Diamond alleged the company is “a distressed payments shell with legacy fraud baggage” and “up 300% over the past month on hype and momentum, but [with] no metrics for revenue projections.” White Diamond also cited a history of failed ventures and pivots by the company and the potential for upcoming dilution.

Recent Resignations

Notable executive departures disclosed in the past week include:

1. CFO of Harmony Biosciences (NASDAQ: HRMY — $1.96 billion) “is stepping down effective as of July 16, 2026 to pursue other career opportunities” after just three months.

2. CFO of Pentair (NYSE: PNR — $10.1 billion) “elected to resign effective as of July 10, 2026 to pursue another opportunity at a private company” after just five months.

3. CFO of CoStar Group (NASDAQ: CSGP — $12.2 billion) “is resigning to pursue another opportunity outside the company’s industry” after a little over two years. In April, Mr. Nana Banerjee, resigned from the board after less than two months. The real estate analytics company is down ~65% over the last year, partly over fears AI will disrupt its business.

4. CFO of Energy Vault Holdings (NYSE: NRGV — $549 million) “will be transitioning from his role to pursue other opportunities” after a little over two years. The company builds gravity-based energy storage towers, has had four CFOs over the last five years, and is down 70% since its February 2022 SPAC merger. In July 2022, The Bear Cave said the company was one of “The Five Worst SPAC Deals Still Above $5.”

5. Mr. Miles E. Everson, board member and former CFO of Fermi (NASDAQ: FRMI — $3.86 billion), resigned after three months “due to a disagreement with the company regarding its governance practices and the company’s failure to provide required Board and committee minutes after a number of requests.” The letter stated, in part:

   “For the avoidance of doubt, I am not resigning for personal reasons, due to time constraints, or as part of an ordinary-course Board transition. I am resigning because I disagree with the company’s failure to provide directors with required Board and committee minutes and related governance records necessary for informed Board service. Please ensure that any public disclosure concerning my resignation accurately describes the circumstances set forth in this letter. I do not consent to any disclosure suggesting that my resignation is unrelated to the governance concerns described above.”

   In April, Fuzzy Panda Research alleged the AI data center infrastructure company had ineffective leadership, no credible plans to build data centers, and upcoming insider selling.

6. Chief Accounting Officer of Asana (NYSE: ASAN — $1.77 billion) resigned after just five months. In addition, the company’s CFO resigned after one and a half years in March and the company’s Chief Operating Officer and General Counsel departed in December 2025.

Data for this section is provided by VerityData from VerityPlatform.com

News of the Week

“They Call Her ‘the Assassin’ on Wall Street—and She Has a New Target” (WSJ)

“Fahmi Quadir had the kind of career any short seller would envy: a record of bringing down companies like the fintech giant Wirecard, a fearsome nickname—‘the assassin’—and two Netflix documentaries highlighting her work uncovering corporate malfeasance.

Now, she’s walking away from it all. After a decade spent driving stocks lower, Quadir has decided she wants to do the opposite—help push them up.”

“Martin Shkreli Is Back, Shorting Stocks and Taking On Everyone” (Bloomberg)

“Indeed, Shkreli’s increased online presence has coincided with Donald Trump’s return to power, and his short calls, in particular, have moved a number of stocks, sometimes by 40% or more in a single day. A pardon, which he talked up to his 500,000-plus X followers in the lead up to what was expected to be a wave of Fourth of July pardons, could get him back into the game after he was banned for life from the pharmaceuticals industry and barred from working in certain securities roles.”

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• “Problems at DraftKings (DKNG)” (September 18, 2025)

• “More Problems at DraftKings (DKNG)” (October 2, 2025)

• “Betting on Tomorrow: A Primer on Prediction Markets” (November 6, 2025)

• “Even More Problems at DraftKings (DKNG)” (February 5, 2026)

Since our first article, DraftKings stock has fallen ~40%. The Bear Cave believes the case against DraftKings is even more compelling today.

In February 2026, The Bear Cave wrote:

Kalshi’s execution has exceeded expectations, while DraftKings continues to fall short. The Bear Cave believes the gap in execution and long-term business model disruption will become painfully obvious to DraftKings investors in the coming months.

Kalshi’s growth is fueled by ad campaigns, earned media, social virality and, above all, superior depth, breadth, and distribution compared to traditional online sportsbooks.

The results speak for themselves:

Today, Kalshi’s execution looks even stronger: cumulative volume has exceeded $100 billion, and weekly notional volume is about $10 billion.

The Bear Cave believes that Kalshi’s growth will ultimately come at the expense of DraftKings, first slowly, then rapidly.

DraftKings investors have repeatedly dismissed the threat from prediction markets, arguing that:

• Prediction markets have worse odds.

• Prediction markets don’t have enough liquidity.

• Prediction markets lack the distribution and customer base to reach a critical mass.

• Prediction markets can’t handle live in-game betting.

• Prediction markets can’t handle whales.

• Prediction markets can’t do props.

• Prediction markets can’t do parlays.

Now, investors believe prediction market risk is priced in.

The Bear Cave strongly disagrees.

Disclosure: The Bear Cave is now owned by Hunterbrook Media. Hunterbrook Media’s investment affiliate, Hunterbrook Capital, does not have any positions related to this article at the time of publication. Positions may change at any time. Please see full disclosures here.

Read more

New Activist Reports

Hunterbrook Media published on Bloom Energy (NYSE: BE — $69.6 billion), a manufacturer of on-site power generation technology. Hunterbrook alleged Bloom falsely claims it does not rely on Chinese scandium when “trade records, satellites, Chinese filings and even its own suppliers in China say otherwise.” Hunterbrook also said that “there isn’t enough scandium on Earth” for Bloom to meet Wall Street’s projections. In addition, Hunterbrook highlighted that last quarter 74% of Bloom’s revenue came from “related parties,” that the company “is booking revenue on sales it hasn’t even invoiced for,” and noted the company is on its 4^th CFO in 2 years.

The Bear Cave is now owned by Hunterbrook Media.

Crossroads Capital also independently published on Bloom Energy and the impending scandium shortage. Crossroads alleged Bloom “is running straight into a supply wall, one that caps the revenue growth and earnings generation the market is pricing in” and added that “the repricing should be severe.”

In response, Bloom published a statement arguing it uses a limited amount of scandium in its products and that “scandium is abundant, widely distributed throughout the Earth’s crust…”

Recent Resignations

Notable executive departures disclosed in the past week include:

1. CFO of Adient plc (NYSE: ADNT — $1.57 billion) “provided notice that he intends to leave his position with the company no later than December 31, 2026” after three years. The automotive seating company disclosed it “has initiated an external search for its next Chief Financial Officer.” The Bear Cave previously included the company on its list of 130 Long-Term Underperformers citing “high buying power of customers focused on cost concessions, capital intensive business, electric vehicles focus on slimmer seats/newer designs, low margins, [and] high debt burden.”

2. CFO of Veraxa Biotech (NASDAQ: VRXA — $311 million) departed with immediate effect after four and a half years. The clinical-stage biopharmaceutical company is down ~80% since its SPAC merger last month.

3. Chief Accounting Officer of Angi Inc (NASDAQ: ANGI — $252 million) after just three months “due to a personal decision to pursue another opportunity in a different industry.” The company has had five CEOs and five CFOs in the last ten years.

4. Ms. Dhivya Suryadevara, President of Fiserv (NASDAQ: FISV — $26.9 billion), resigned for “good reason” after seven months. Last month, the financial technology company’s CEO departed after a little over one year.

5. Chief Accounting Officer of Quaker Chemical (NYSE: QWR — $2.57 billion) resigned “to pursue another career opportunity” after one year. The company’s prior Chief Accounting Officer departed after one and a half years.

6. Ms. Monica Bertagnolli, board member of Natera (NASDAQ: NTRA — $38.7 billion), resigned after a little over one year “due to her new position with the National Academy of Medicine.”

7. Mr. George Holding, board member of Trump Media & Technology Group (NASDAQ: DJT — $2.37 billion), the US Director of the European Bank for Reconstruction and Development nominated by President Trump in September 2025, resigned after a little over one year. The company has had five board departures in the last eighteen months.

8. Chief Legal Officer of Eos Energy Enterprises (NASDAQ: EOSE — $1.55 billion) departed after two and a half years.

Data for this section is provided by VerityData from VerityPlatform.com

News of the Week

“The White House Made Fixing Intel Its Pet Project. It’s Working.” (WSJ)

“Trump and Lutnick urged Cook to use Intel’s manufacturing plants, or fabs, to make some of Apple’s chips, according to government officials. In one of the most remarkable examples of state capitalism in recent memory, the U.S. government became the chipmaker’s largest shareholder later that month when it converted $9 billion in federal grants into a 10% stake in the company.”

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The Bear Cave is now owned by Hunterbrook Media. Readers will continue to receive two original deep-dive paywalled investigations in The Bear Cave each month, along with select Hunterbrook stories featuring additional content and analysis in The Bear Cave.

New Activist Reports

The Bear Cave published an investigation in collaboration with Hunterbrook Media on StepStone Group (NASDAQ: STEP — $4.91 billion), a global private equity and private markets company. The investigation alleged StepStone’s growth has come, in part, from charging fees on unrealized private-asset gains and highlighted:

“Due to an ill-timed contract, StepStone must buy out the profits interests tied to that retail arm held by CH Equity Partners LLC, an entity controlled by SPW executives. Since April 1, CH Equity Partners LLC has the right to lock in a giant personal payday, using a formula tied to the private wealth arm’s paper marks. StepStone’s liability is now estimated at about $2.3 billion.”

Culper Research published on Tarsus Pharmaceuticals (NASDAQ: TARS — $2.82 billion), a biopharmaceutical company focused on eye care. Culper alleged that Tarsus donates millions of dollars “to a nominally independent blepharitis fund” that primarily subsidizes the copays of its expensive XDEMVY eyedrop medication, potentially in violation of anti-kickback laws. Culper wrote:

“The blepharitis fund claims to offer grants for over a dozen treatments, but mathematically, [Tarsus’s] XDEMVY is the only drug capable of meeting the fund’s disclosed $680 to $750 average grant size - the vast majority, if not entirety of the fund is going to XDEMVY patients.”

Culper concluded:

“We are short [Tarsus] and think shares are headed lower as the company draws AKS/DoJ scrutiny, XDEMVY revenues peak well below $2B, and 2026 results continue to disappoint.”

Fugazi Research published on Redwire (NYSE: RDW — $2.70 billion), a space equipment manufacturing company. Fugazi wrote:

“Since late 2025, Redwire has relied heavily on the equity markets to fund its operations, authorizing more than $1.1 billion of at-the-market equity issuance while common shares outstanding have nearly tripled in roughly fifteen months. Operating cash flow remains negative, and recent increases in cash have been driven by equity issuance rather than internally generated cash flow.”

Recent Resignations

Notable executive departures disclosed in the past week include:

1. CFO of Lucid Group (NASDAQ: LCID — $2.37 billion) “will leave the company after a transition period” after one and a half years. Last week, the company’s Chief Operating Officer, who previously served as interim CEO, “departed following the elimination of the Chief Operating Officer position” after two and a half years. The electric vehicle company has had three CEOs and three CFO departures in the last five years and has fallen ~95% since its July 2021 SPAC merger.

2. CFO of Papa John’s (NASDAQ: PZZA — $1.18 billion) resigned after nearly three years to become CFO of American Eagle (NYSE: AEO — $2.76 billion) and “is not entitled to any severance benefits as a result of his departure.” Papa John’s has had five CEOs and six CFOs in the last ten years.

3. CFO of Freedom Holding Corp (NASDAQ: FRHC — $9.94 billion) resigned with immediate effect after 17 years and was replaced by the 37-year-old incoming CFO, Mr. Valeriy Kim.

4. Chief Revenue Officer of Five9 (NASDAQ: FIVN — $1.79 billion) departed with immediate effect eleven months after being promoted into that role. The company’s Vice President of Product Engineering and Chief Technology Officer both resigned in June as well. In September 2024, The Bear Cave called the company “a major AI loser” and it has since fallen ~20%.

5. Mr. Sean McNealy, board member of Abacus Global Management (NYSE: ABX — $1.14 billion), resigned with immediate effect after three years. In June 2025, Morpheus Research alleged Abacus engaged in “a scheme to systematically overvalue its assets, reminiscent of past life settlements blowups.” The stock has since doubled.

Data for this section is provided by VerityData from VerityPlatform.com

News of the Week

“Short-seller Carson Block: a fugitive CEO, Libyan spies, and $50B fraud” (Summation with Auren Hoffman)

“SEC Investigation Updates: June 29, 2026” (Disclosure Insight)

“AppLovin (NASDAQ: APP — $177 billion) management and board failed investors here. The Bloomberg story was the perfect opportunity to disclose this investigation. Instead, we now must call out the company over an undisclosed SEC probe and add it to our Watch List where you will see regular updates until resolved.”

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I’m a big fan of this investigation and excited for it to run on The Bear Cave. More investigations from me, and from the Hunterbrook team, ahead.

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Disclosure: Based on Hunterbrook Media’s reporting, Hunterbrook Capital is short $STEP and long a basket of comparable securities at the time of publication. Positions may change at any time. This article is not investment advice or a recommendation to buy, sell, or hold any security. See full disclosures below and on Hunterbrook Media's website.

Authors: Bethany McLean, Matthew Termine, JD Jean-Jacques

Editor: Jim Impoco

StepStone (NASDAQ: STEP) is valued at $5 billion on fees it charges for asset management. Those assets have ballooned on paper, driven by stakes in AI companies and SpaceX. But that boom has set up a potential bust. StepStone is obligated to buy out a stake in its retail arm, while the STEP balance sheet only has $200 million in cash. To survive the impending payout, STEP will likely need to raise billions in stock and debt. How did a major global asset manager end up in a liquidity trap?

• StepStone helped popularize the “retailization” of private markets — packaging stakes in private companies and private funds into public products sold to retail investors through stockbrokers. The retail arm, StepStone Private Wealth (SPW), grew from about $3 billion in managed assets in 2024 to around $18 billion today.

• Due to an ill-timed contract, StepStone must buy out the profits interests tied to that retail arm held by CH Equity Partners LLC, an entity controlled by SPW executives. Since April 1, CH Equity Partners LLC has the right to lock in a giant personal payday, using a formula tied to the private wealth arm’s paper marks. StepStone’s liability is now estimated at about $2.3 billion.

• How did StepStone end up in this position? The buyout undid an even worse deal StepStone seemingly didn’t disclose at IPO. When the retail arm launched in 2019, CH Equity Partners received an option to buy SPW back from StepStone. StepStone didn’t disclose this contract in its prospectus when it went public in 2020, suggesting the company saw the agreement as immaterial. But SPW soon became core to StepStone’s business — and, in 2022, the company renegotiated its deal, agreeing to the terms of the looming buyout that now threaten to decimate its balance sheet.

• StepStone says the buyout could be “accretive,” and, on paper, the deal looks reasonable. Under the hood, the firm must actually pay an extremely rich multiple on recurring fees. We estimate StepStone is paying more than 40 times the trailing recurring fee-related earnings it is actually acquiring. That’s around triple what Stepstone, itself, fetches for its stock in public markets — and a higher valuation than the top firms in the industry, like Blackstone and Apollo. In total, the stake StepStone is buying received $53 million last year in recurring fee-related earnings, less than 3% of what STEP is paying for it. In response to Hunterbrook’s request for comment, StepStone calls this math “fundamentally flawed,” saying it compares a forward-looking purchase price that “accounts for continued growth” against a single year of trailing earnings. The company says the deal is “structured to be executed at a discount to the prevailing STEP multiple.”

• The gains underpinning those fees are mostly paper and largely unverifiable. In the key retail fund of SPW, over the last fiscal year, “net unrealized gains for the year were $1.87 billion, while net realized gains were only $3 million,” according to the Wall Street Journal. Over 70% of that fund’s portfolio sits in vehicles whose holdings are opaque, according to Hunterbrook’s analysis, raising questions regarding how ordinary investors can vet these marks. StepStone disputed this framing in its statement to Hunterbrook, saying SPRING’s marks are set under fund valuation policies, reviewed by “reputable external auditors” and “an independent board of trustees,” and that it obtains “positive assurance from a third-party valuation agent on all material positions at least once per year.”

• To pay the bill, StepStone seemingly must dilute shareholders, issue debt, or both — with an SPW liability that has already pushed the book value below zero. Management has said the deal will be paid for “largely” in stock, likely devaluing existing shares by about a fifth, with the rest owed in cash it says it may raise in debt. StepStone told Hunterbrook in its statement that it “will be able to meet the cash requirements,” funding the cash portion through “cash on the balance sheet, future operating cash flow, capacity on our revolving credit facility, and flexibility to raise capital.” It also noted: “We remain in continuous dialogue with CH Equity Partners LLC, and we believe that we will be able to meet the cash requirements for settlement of the liability, should they decide to exercise the put option.”

• StepStone defended the transaction in a detailed response to Hunterbrook. The company says the buyout is priced at a discount to StepStone’s own trading multiple, that SPRING’s marks are reviewed by external auditors and a third-party valuation agent under an independent board, and that the economics are held by an entity — CH Equity Partners LLC — whose ownership is aligned with the interests of the overall company. On its marks, StepStone has said gains may be “unrealized,” but “that does not make it unreal.”

“The indignation school of writers never tires of pointing out the millions that are stolen in the Street. But while the millions are being stolen, the billions are being lost.”

Stock-broker-turned-author Fred Schwed Jr. wrote that in 1940, a decade after the crash that ended the Roaring 1920s, in his classic: “Where Are the Customers’ Yachts?”

Eighty-six years later, a $5 billion asset manager called StepStone Group ($STEP) has built a machine Schwed would have recognized. It collects real fees off gains that exist only on paper. And it has structured those paper gains so that if they reverse, the paper gains aren’t clawed back. The losses land on everyone else.

One of the cleanest windows into this machine is the recent SpaceX ($SPCX) IPO. StepStone’s flagship retail fund, known as SPRING, paid roughly $270 million for a direct stake in the rocket company. By the end of March, StepStone’s internal valuation committee had marked that same, unchanged stake up to about $587 million — booking a $317 million gain without selling a single share.

SpaceX has become the fund’s largest position at around a fifth of the entire portfolio. The firm charged its retail investors lucrative performance and management fees on that upward paper march, and those fees were paid out to the firm — even though StepStone has not cashed out.

This was, inarguably, a good trade for StepStone!

But now that SpaceX trades publicly, StepStone’s investors are in a bind that Schwed would have recognized instantly: Nearly anyone in the world can now look up what SpaceX is worth and sell it in seconds — except the retail customer who owns it through SPRING.

Because private-market “evergreen” funds are tightly gated, these everyday investors can pull out only a sliver of their money each quarter, and management retains the right to freeze withdrawals entirely if a market panic hits. The fees on the gain have already been spent or allocated away. Some portion of the gain itself can still vanish. And if it does, the captive retail customer takes the absolute loss, while the insiders keep the cash.

That is the micro version of the story — and it’s an example of why existing SPRING investors may now be tempted to leave the fund; and why prospective investors may be harder to convince to join. Why pay 15% performance fees on an illiquid SpaceX investment when $SPCX is trading in the open market?

And to be clear: This is one of the best examples of StepStone’s investments. Most of its portfolio companies have not gone public — and do not have marks that can be verified from the outside.

But there is a bigger story lurking here. StepStone itself faces a massive liquidity crisis. StepStone’s fastest-growing business is its retail arm, StepStone Private Wealth, which bundles private investments into “evergreen” funds like SPRING and sells them to well-off individuals through their stockbrokers. But StepStone itself doesn’t have rights to a large portion of the profits generated by this business.

Years ago, it handed CH Equity Partners LLC, an entity affiliated with executives who run that business, a share of its profits along with, critically, an escape hatch: the right, beginning this year, to force StepStone to buy them out. StepStone hasn’t publicly disclosed a comprehensive list of the individuals behind the entity, but told Hunterbrook it “includes many members of our SPW team.” It is unclear when CH Equity Partners plans to exercise this right.

The catch? The buyout price appears to be dictated by a formula pegged directly to the fees the funds have generated — including the performance fees StepStone charges on its own paper markups. Consequently, every dollar StepStone marks its funds up doesn’t just trigger a fee for its retail investors; it automatically inflates what StepStone owes its own executives. The paper gains, in other words, transform into a real bill.

And because StepStone has marked up its assets so much in recent years, the buyout already stands at an estimated $2.3 billion as of March 31.

StepStone told Hunterbrook the $2.3 billion figure “reflects the current estimated fair value of the future buy-in price under GAAP as determined with the assistance of a third-party valuation specialist.” It also said this calculation was based in part on “SPW’s projected earnings, which reflect an assumed rate of fund performance for each fund.”

To put that $2.3 billion number in perspective, StepStone’s entire corporate balance sheet holds just $213 million in cash. And that price is staggering by the measure that arguably matters most for an asset manager: what it is paying relative to the earnings it’s actually buying.

Businesses are generally valued as a multiple of their profits — loosely, how many years of earnings it would take to make the purchase price back. StepStone’s own stock trades at about 13 times its trailing fee-related earnings (FRE).

The formula dictating this buyout is different. It forces StepStone to buy CH Equity Partners’ stake at what we estimate to be roughly 43 times the recurring fees the stake generated last year — more than triple the price the market puts on StepStone itself. (StepStone called this calculation “fundamentally flawed” — “mismatched periods resulting in an inconsistent multiple” — because the $2.3 billion liability “accounts for continued growth in the private wealth platform.”)

StepStone did not propose an alternative measure for the multiple.

How can a slice of StepStone’s own profits, valued on the same type of revenue stream, have triple the valuation multiple of the business as a whole?

Because, unlike the typical way of valuing asset management income streams, the buyout formula doesn’t price the stake on its steady, recurring fees alone. It also capitalizes on the fund’s past performance fees — the 15% cut StepStone books every time it marks a holding higher — and pays CH Equity Partners a multiple on those, too.

Look at the SpaceX example: StepStone already charged clients tens of millions in performance fees on SpaceX’s paper markup, Hunterbrook estimates. But, according to the terms of the buyout deal, CH Equity Partners is going to be paid a multiple of the fees it has already received on deals like SpaceX in exchange for their profit interest in the fund — even though there is no guarantee, in the future, a similarly lucrative deal will come around.

To pay the full $2.3 billion insider invoice, StepStone will have to dilute its public shareholders by issuing new stock or borrowing heavily from credit markets — maybe both. (The payout is to be a minimum of 25% cash with the remainder in StepStone stock — with the cash and stock, subject to transfer restrictions, owed in short order once the put is exercised.)

What makes the contract even more absurd, at least from StepStone’s perspective, is that the higher it marks its funds between now and the payout, the more cash and stock it will be forced to pay its own executives.

The millions of dollars in gains are being collected by Stepstone executives. The question this story asks is who, in the end, is left holding the losses that may follow.

StepStone’s looming bill has begun to receive some media attention, from the Wall Street Journal, Barron’s, and the blog Mispriced Assets. You should read those excellent articles.

We took a more forensic look.

Read more

This one is special: I am excited to announce Hunterbrook Media has acquired The Bear Cave.

Since our founding in a Stanford dorm room six years ago, our posts have been read over 20 million times and have sparked stock declines, social change, and even congressional inquiries. We have grown into a community of over 87,000 readers and become an essential distribution point for scrutinizing companies and speaking truth to power.

The Bear Cave made this impact with just one author.

But in the golden age of grift and graft, there are more stories to be written, secrets to be exposed, and digging to be done. That is why The Bear Cave is joining Hunterbrook Media.

Most of you know Hunterbrook’s work; its reporting has repeatedly been featured in The Bear Cave. But if you aren’t familiar, you should know they have brought together a world-class team of journalists, ranging from @OSINTtechnical to Bethany McLean.

You can read more about Hunterbrook, its model, and its impact here.

In the near term, nothing will change for our readers: I will continue to write the Sunday newsletter and paywalled investigations. Over time, Hunterbrook’s team will also contribute articles, both free and paywalled, helping expand our impact.

This partnership will be a win for readers, a win for impact journalism, and a loss for bad actors wherever they may hide.

The Bear Cave’s next special investigation for paid readers comes out this Thursday, July 2.

New Activist Reports

Pelican Way Research published on Hyliion Holdings (NYSE: HYLN — $788 million), an energy technology company. Pelican Way alleged that a recent “~$133mm LOI with VFG Holdings, which had sent the stock up ~150%+, is misrepresented and that VFG is seemingly unable to support an order of that size.” Pelican Way also raised skepticism about the company’s efforts to portray itself as an AI data center beneficiary and noted that Hyliion previously compared itself to Nikola Motors. Pelican Way found that Hyliion’s CEO has “paid himself more in compensation since 2021 than the entire company has done in revenues.”

Umibōzu Research published on EquipmentShare.com (NASDAQ: EQPT — $5.17 billion), a construction rental and technology services company for builders and contractors. Umibōzu highlighted allegations from the company’s largest outside holder of “ongoing fraud” by the founders. Based on its investigation, including “interviews with [former employees] and industry experts, plus a review of litigation, property records, and UCC filings,” Umibōzu expanded the allegations to include “undisclosed related-party deals netting [founder]-affiliated entities at least $77M.”

Morpheus Research published on Velo3D (NASDAQ: VELO — $496 million), a 3D printing company. Morpheus alleged the company’s new CEO “appears to have fabricated virtually every aspect of his background” and that multiple former Velo employees said its SpaceX relationship “has been effectively dead since 2024.” Morpheus concluded:

“Velo3D has fundamental downside risk due to a nosebleed valuation of 10.7x P/S, a premium of 858% to its peers. Velo3D trades at this premium despite consistent losses, inferior margins, 6 quarters of flat revenue growth, and a slew of red flags including high executive turnover and seven material weaknesses in its financial controls. Meanwhile, CEO Jeldi has effectively cashed out by pledging $54 million worth of shares for a private loan.”

In its disclaimer, Morpheus disclosed that it “frequently enters into arrangements with capital providers pursuant to which those capital providers establish positions in a target company” and added: “You should assume that as of the time you read this report, Morpheus Research has covered or closed some or all of its initial positions at the time of publication.”

Fugazi Research published on FreeCast (NASDAQ: CAST — $318 million), a media distribution company. Fugazi alleged the company’s recent 10x rise is due to spurious press releases about Starlink, while FreeCast is actually “a capital-starved company that has relied on related-party funding, converted debt, preferred stock, warrant amendments, and an equity purchase agreement to keep the story alive and maintain market access.”

Recent Resignations

Notable executive departures disclosed in the past week include:

1. CFO of AlTi Global (NASDAQ: ALTI — $537 million) will retire effective July 1, 2026 after a little over one year. The wealth management firm has had four CFO departures over the last five years and is down ~65% since its January 2023 SPAC merger.

2. CFO of Wendy’s (NASDAQ: WEN — $1.49 billion) was terminated without cause after one and a half years. The company has had four CEOs and three CFOs in the last three years. Wendy’s rose ~16% this week, following speculation from WallStreetBets on Reddit.

3. CFO of Reinsurance Group of America (NYSE: RGA — $14.1 billion) “will leave the company on July 17 to pursue a new opportunity” after nearly two years.

4. CFO of Goodyear Tire (NASDAQ: GT — $1.97 billion) “is resigning to pursue another opportunity” after three and a half years. Last year, the company’s Chief Digital Officer and President of Europe, Middle East and Africa departed amid ethics scandals. The Bear Cave previously highlighted Goodyear as a long-term underperformer, citing its total shareholder return of +185% since January 1962 compared to a +63,200% return for the S&P 500.

5. Chief Operating Officer of Lucid Group (NASDAQ: LCID — $2.31 billion), who previously served as interim CEO, “departed following the elimination of the Chief Operating Officer position” after two and a half years. The electric vehicle company has had three CEOs and three CFOs in the last five years and has fallen ~95% since its July 2021 SPAC merger.

Data for this section is provided by VerityData from VerityPlatform.com

News of the Week

“Abaxx calls for probe, hires Paul Weiss after short seller’s attack” (Bloomberg)

“Abaxx Technologies is asking Canadian market regulators to investigate whether manipulative trading occurred in its shares, and has hired law firm Paul Weiss for help in response to a short-selling campaign by Viceroy Research.”

“Investor Who Scored 900% Win in 2008 Crisis Has New Big Short Bet” (Bloomberg)

“Today, he sees a new opportunity as risks bubble up around private credit. But instead of betting directly against the sector, he’s focused on potential second-order effects and is shorting some of the $1.8 trillion market’s biggest backers: insurers.

Robinson is ramping up bearish wagers on firms from Lincoln National Corp. to MetLife Inc. and even Berkshire Hathaway Inc. through the use of credit default swaps, derivative contracts designed to protect investors against a default.”

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New Activist Reports

Jehoshaphat Research published on Gildan Activewear (NYSE: GIL — $9.62 billion), a Canadian apparel company. Jehoshaphat accused the company of channel stuffing, “selling more into a distribution channel than is necessary to support underlying demand, in order to advance short-term growth,” supported by interviews with seven former employees, customers, or distributors. One former employee interviewed by Jehoshaphat allegedly said:

“If there was a sense that we might not hit the sales numbers that we had communicated to the market, the sales team would offer incentives to the distributors to take on more weeks of supply than they normally had, or rebates at the end of the quarter, or more favorable payment terms. These are all mechanisms that were used to compel the distributors to bring forward some purchases…they’d move sales from Q2 to Q1, then they’d repeat the same song and dance in Q2.”

Gildan Activewear stock fell ~14% this week following the report. In its enhanced report disclaimer, Jehoshaphat disclosed a “decent chance we’ll exit the entire short position on the same day we publish our opinions.”

Hunterbrook Media published an update on Ensign Group (NASDAQ: ENSG — $8.98 billion), a large nursing facility roll-up. Hunterbrook alleged additional misconduct and maltreatment of patients at Ensign facilities, including allegations that the facility was “stripped of resources when Ensign took over,” and others have insufficient food for patients.

Grizzly Research published on 2CRSi SA (Paris: AL2SI — 574 million EUR), a French technology company. Grizzly believes “the majority of 2CRSi revenue and contract announcements to be a severe misrepresentation, which 2CRSi orchestrated through undisclosed related parties” and alleged that nearly all its recent business deals have been orchestrated by a veterinarian in upstate New York. Grizzly alleged that these undisclosed related-party entities have minimal legitimate business activity but are placing orders with 2CRSi totaling hundreds of millions to inflate the stock.

Fuzzy Panda Research published an update on T1 Energy (NYSE: TE — $2.61 billion), a clean battery solutions company formerly known as FREYR Battery, and further alleged accounting irregularities based on information shared by whistleblowers.

Keith Dalrymple at DF Research published on Rockpoint Gas Storage (Toronto: RGSI — CAD$3.90 billion), a natural gas storage facility company. Mr. Dalrymple alleged that “management’s story of stable growth [will] unravel” and said the business has “a volatile, cyclical financial model.”

Viceroy Research published several updates on Abaxx Technologies (Toronto: ABXX — CAD$1.76 billion), a Canadian financial infrastructure company building a futures exchange in Singapore for physically-deliverable contracts for energy, battery metals, carbon credits, and precious metals.

Recent Resignations

Notable executive departures disclosed in the past week include:

1. CEO of Fiserv (NASDAQ: FISV — $25.5 billion) “stepped down as CEO and member of the board to return to banking and become CEO of Truist Financial (NYSE: TFC — $60.2 billion)” after a little over one year.

2. CFO of MapLight Therapeutics (NASDAQ: MPLT — $1.31 billion) departed “effective immediately, following a review of a human resources violation” after a little over two years. In April, two of the company’s seven board members disclosed they would not stand for re-election.

3. CFO of Certara (NASDAQ: CERT — $862 million) “is resigning to pursue another opportunity” after a little over three years.

4. CFO of Pfizer (NYSE: PFE — $144 billion) resigned “for a professional opportunity outside of the pharmaceutical industry in consumer goods” after a little over four years.

5. General Counsel of Hamilton Beach Brands (NYSE: HBB — $277 million) departed “effective immediately” after a little over one year.

Data for this section is provided by VerityData from VerityPlatform.com

News of the Week

“Ken Griffin’s Billions and Billions” (New Yorker)

“I asked Griffin to name which hedge-fund ‘ancestors’ he’d modelled himself on. For seven seconds, he regarded me in silence. New Citadel employees learn not to fill in those pauses…”

May 2026 SEC FOIA Logs (SEC)

New SEC FOIA Logs released this week included Spire Global (NYSE: SPIR — $763 million), Blaize Holdings (NASDAQ: BZAI — $201 million), Starfighters Space (NYSE: FJET — $231 million), GameStop (NYSE: GME — $9.66 billion), Victoria’s Secret (NYSE: VSXY — $6.52 billion), and F5 Inc (NASDAQ: FFIV — $21.8 billion) on the B7A FOIA exemption list, which a sign of a likely SEC investigation.

Tweets of the Week

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The Bear Cave is Not Investment Advice. Twitter: @StockJabber

“We are not trying to convict a trader for being a trader. We are trying to convict a trader for being a fraudster.”

I felt tremendous sympathy for Andrew Left when prosecutor Ben Balding called Andrew Left a fraudster in the last line of closing arguments.

Over the last 25 years, Andrew Left has exposed price gouging and fraudulent billing at Valeant Pharmaceuticals, insolvency at China Evergrande, and abusive drug pricing at Mallinckrodt, among many other issues. He is the godfather of activist short selling, and without him markets would have more fraud and fewer skeptics willing to speak publicly.

So why was the government calling Andrew Left a fraudster?

In his rebuttal closing argument, Mr. Balding said:

“The literal truth of statements in the tweets is not the issue.”

Mr. Balding added:

“The con is he says a stock is garbage and buys it back at a lower price.”

In short, Mr. Balding argued that Andrew Left “would target a stock, tweet, and trade opposite,” the heart of the government’s case throughout the three-week trial.

The theory of the prosecution was not about false statements, and the government noted in closing arguments that there need not be any victims to convict Andrew Left of market manipulation and securities fraud.

In the government’s view, this was a case about half-truths, nefarious intent, and easy money. As the prosecution liked to highlight, “Investors are emotional, like a flock of birds, during trading hours” and Andrew Left would monetize this emotion through sensational statements to move stock prices.

In my view, Andrew Left’s “fraud” was one that, in aggregate, left his readers wealthier and better informed.

Above all, the conduct of Andrew Left was in line with industry-standard practices and, in my opinion, less aggressive than other activist short sellers.

We showed this in Part 1 by reviewing the disclaimers of major activist short sellers, which explicitly disclose or imply engaging in the short-term trading pattern for which Andrew Left was criminally prosecuted. This is even more true today, as short activists add new disclosures in light of Andrew Left’s criminal conviction.

For example, take the public statements from the U.S. Attorney’s Office for the Central District of California and the Department of Justice after Andrew Left’s conviction, with my emphasis in bold:

“He profited by taking advantage of the intended short-term movement in the company’s share price caused by his commentary.” (Link)

“Left often built his positions using inexpensive, short-dated options contracts that expired the same day that he published his commentary.” (Link)

“Left took financial positions in Nvidia, including short-dated call options that expired three days later. Short-dated options can offer quick profits if a stock suddenly moves in the narrow timeframe before expiration.” (Link)

“Left established long or short positions in the public company on which he was commenting and prepared to quickly close those positions post-publication and take profits on the short-term price movement caused by his commentary.” (Link)

“Left used his advance knowledge and control over the timing of a market-moving event to build his positions using inexpensive, short-dated options contracts that expired from the same day that he published his commentary to within five days.” (Link)

The government views the use of short-term options contracts as inappropriate conduct when publishing market-moving commentary. Yet, use of short-term options is an industry-standard practice among activist short sellers along with short-term trading around reports.

Don’t take my word for it.

Just look at the new disclaimer from Jehoshaphat Research on its short report published two days ago. The disclaimer stated, in part:

“As is common for short activists, we or our affiliates or partners put money, sometimes including short-dated options, into short positions prior to publishing most (ideally, all) of our theses. This kind of positioning and risk management can put our interests at odds with yours. We have a lot of bias and incentives, just like any investor of course. Similar to any long-biased investor who publicly speaks about a stock on TV, for instance, there’s no guarantee that we’ll come back and update you when we change our mind about something we’ve said. Once we’ve told the world about a short position in a stock, we’re probably going to start exiting, or in other words, buying to cover that stock (although we can’t be certain of this plan in advance, it’s usually what ends up happening and what we expect to happen). There’s even a decent chance we’ll exit the entire short position on the same day we publish our opinions about it.” (My emphasis)

Likewise, in a short report published on June 11, 2026, Muddy Waters Research’s disclaimer included a “Left Disclosure” that stated, in part:

“‘Left Disclosure’: As of the time and date of this report, Muddy Waters is short the securities of, or derivatives linked to The Ensign Group, Inc. (ENSG). Upon publication, we intend to begin covering a substantial majority – possibly all – of our short positions.” (My emphasis)

Following Andrew Left’s conviction, Assistant Director Patrick Grandy of the FBI Los Angeles Field Office said:

“While this conviction cannot make up for the significant and emotional harm he inflicted upon his unwitting investors, it does send a message to those who may be looking to profit from similar schemes…”

Yet, the two weeks following Andrew Left’s conviction show the exact opposite. Activist short sellers continue to profit from similar strategies, in large part because clear rules and regulations do not exist.

If the government does not like immediate trading around reports, why not make a rule or regulation for holding periods or disclosure obligations?

If the government does not like third-party (“balance sheet partner”) trading around reports, why not make a rule or regulation for balance sheet partners?

If the government is concerned about “concealed relationships with hedge funds” or the dissemination of third-party work, why not make rules on when activist shorts sellers or public commentators need to disclose their research collaborators?

Nearly all large activist short sellers trade around reports, use short-term options (or use balance sheet partners that do), and collaborate with third parties on research projects. In addition, the government’s case against Andrew Left doesn’t address many of the more aggressive practices of activist shorts sellers such as transacting in SEC whistleblower case equity or paying sources large amounts for information – because Andrew Left did not engage in these practices.

These issues should be addressed not through arbitrary and selective criminal prosecutions but through clear rules and regulations.

Because we have none, our best understanding of the government’s views comes from the trial of Andrew Left.

Let us revisit courtroom 8C of the First Street Courthouse in downtown Los Angeles. It is Friday, May 22, The Honorable Virginia A. Phillips is still presiding, and a dozen lawyers, thirteen jurors, and one defendant sit before her.

This article represents my own opinions based on my observations, handwritten notes from the trial, industry knowledge, and conversations with others.

As Andrew Left took the stand in his defense, he appeared slightly nervous and tense, a first in the ten years I’ve known him. Andrew Left is typically confident, colorful, and comedic, and had been throughout our interactions during the trial. For the first time, I could feel the impact of the five-year case weighing on him.

Andrew Left started with a quick joke to the jurors about how, after two weeks of looking at each other, it was nice to finally talk directly. He became emotional as he acknowledged his supporters in the gallery: his wife, eldest son, and roughly a dozen friends, most from fields outside finance.

Defense attorney Adam Fee, a dominant presence in the courtroom known for his aggressive cross-examinations, adopted a soft, soothing voice as he began questioning Andrew Left, who introduced himself:

“I research companies and give my opinions on stocks…. Wall Street is very biased. 90% of ratings are buy ratings, there was an opportunity to do contrary research.”

Andrew Left started Citron Research, which operated under the name StockLemon for its first six years, shortly after 9/11 and testified that one of his early advantages was using Google for research. In 2014, Citron Research started publishing long-biased stock ideas, many of which were now the focus of the criminal trial.

Adam Fee then produced Citron Research’s bullish 2018 Tesla report, displaying it on the monitors in front of all jurors, attorneys, the judge, and on one large TV screen in front of the gallery.

The October 2018 Tesla report began:

“Citron reverses opinion on Tesla. The story has become too compelling to ignore.”

“The most challenging part of being a short seller is to constantly check your thesis to make sure nothing has changed. You must let all predispositions and prejudices disappear and stay focused on only the facts.

It is in that spirit and with a great deal of analysis and due diligence that we can say for the first time, Citron is long Tesla as the Model 3 is a proven hit and many of the TSLA warning signs have proven not to be significant.”

The defense also emphasized the last page of the report, which said in part:

“By no means does Citron only trade on publishing stories. We actively manage a book that has been trading Tesla for five years.”

As Andrew Left began talking about his 2018 Tesla report, he became notably more relaxed. He said he became bullish on Tesla after talking to Adam Ramada, a frequent confidant on stock ideas.

The Tesla report exemplified the three key points for Andrew Left’s defense:

First, Andrew Left usually got it right. In fact, Tesla is up ~20x since Andrew Left’s bullish report.

Second, Andrew Left is a trader. The report discloses he trades on reports, actively manages his own portfolio, and can change his mind on positions.

Third, Andrew Left collaborates with others, not in a malicious way as portrayed by the prosecution, but in a human way. The defense emphasized that creating reports is a collective process often done with a network of people Andrew Left first met on Twitter. On the topic of seeking out expertise, Andrew Left testified:

“If I’m sick, I go to a doctor. If I’m very sick, I go to a specialist.”

During his remaining testimony on Friday, Andrew Left pushed back on the notion that he should talk to the management of the companies he criticized, arguing that all information needed should be in the public domain and that management can fool investors into believing false narratives, such as when he was bullish on Invitae after meeting management. Andrew Left also testified that he made his reports colorful to reflect his personality, unlike Wall Street research which “was boring to read.”

Adam Fee asked:

“Did you want to affect stock prices?”

Andrew Left responded:

“Yeah”

Andrew Left added that he had never expected his trading to land him in court and maintained that what mattered was the substance of the reports, not his personal trading.

The first day of Andrew Left’s testimony ended with the strongest point about trading “opposite” his published views. Logically, if Andrew Left was trading “opposite” his published “recommendations,” then his true view must actually be opposite what he wrote. Andrew Left testified, in part:

“This whole trial ‘opposite’ has not made sense… When I say Tesla is good does that mean I think it’s bad? When I say Namaste is a fraud does that mean I think it’s good?”

The jury then went on a three-day break for Memorial Day weekend.

Returning on Tuesday, May 26, Andrew Left seemed fully relaxed and confident. The defense seemed to think his first day of testifying went well. I agreed.

Early in the day, Adam Fee asked Andrew Left to remember the logic behind the Citron report calling McKesson “complicit in fueling the opioid crisis.”

As Andrew Left recounted the opioid epidemic, rulings that had labeled Johnson & Johnson a public nuisance, and his theory that similar liability could extend to McKesson, the mood in the jury box visibly shifted. Jurors who had appeared neutral became attentive and, at moments, sympathetic or curious.

It was one of Andrew Left’s strongest moments on the stand. To my surprise, prosecutors raised few objections, largely allowing the defense to paint its own narrative uninterrupted.

Adam Fee and Andrew Left then revisited the prosecution’s notion that Andrew Left would trade “opposite” his public commentary.

Adam Fee asked:

“Is trimming a long position the same as shorting a stock?”

Andrew Left responded:

“Absolutely not… shorting would be the complete opposite.”

Fee: “Were you ever long while speaking negatively?”

Left: “No”

Fee: “Were you ever short while speaking positively?”

Left: “No”

Later, Adam Fee asked:

“Were you hoping to make money trading around the report?”

Andrew Left responded:

“Yes, I was.”

Then the defense moved to Cronos and the infamous “candy from a baby” text.

Andrew Left published a critical report on Cronos Group (NASDAQ: CRON) in August 2018 and tweeted that the company was “ALL HYPE with possible securities fraud.” The Citron Research report included a price target of $3.50 per share.

Since Citron published the report, Cronos stock has declined from roughly $10 per share to less than $3 per share and in October 2022 the SEC charged Cronos “for improperly accounting for millions of dollars of revenue and for other accounting misconduct.”

Despite his predictions being correct, the jury ultimately convicted Andrew Left of securities fraud for his commentary and trading around Cronos.

Part of that decision may have been influenced by Andrew Left’s text messages with Sunny Puri, a portfolio manager at Anson Funds.

Following his Cronos report, Andrew Left texted Mr. Puri:

“I will short more CRON if we get 10.5”

“Now that we know who owns it”

“Candy from a baby”

Here is how Assistant Attorney General A. Tysen Duva described the texts, quoted at the top of the Department of Justice’s press release following Andrew Left’s conviction:

“Andrew Left used his expertise to profit at the expense of retail investors, ordinary people who owned the stocks he targeted. He callously boasted that it was like ‘taking candy from a baby.’”

This is consistent with the prosecution’s arguments during trial: Andrew Left viewed trading against his readers as taking candy from a baby.

This couldn’t be more wrong. Andrew Left correctly warned retail investors about real risks associated with Cronos. In my view, the texts show Andrew Left’s private view mirrored his public one: Cronos was overvalued. And the texts show that Andrew Left viewed Cronos shareholders, his counterparty, as uninformed and trading against his counterparty, not his readers, was “candy from a baby.”

In short, Andrew Left and Citron’s readership would make money (or “candy”) betting against the overhyped stock with an uninformed shareholder base.

Andrew Left testified that after his first Cronos report, he received more than 100 emails he characterized as unintelligent from Cronos shareholders, which furthered his confidence in his bearish Cronos thesis.

Adam Fee asked:

“Who are you referring to as the baby?”

Andrew Left testified:

“People who invest without doing research… the opposite of my readers”

In a trial overflowing with intellectual dishonesty, “candy from a baby” was the most dishonest point, and one that was widely reported.

One common pushback among short activists and industry participants is that Andrew Left did not just trade aggressively around reports, an industry-standard practice, but also misrepresented his trading publicly. That is the distinction, in some minds, between normal short activism and criminal market manipulation.

For example, the Department of Justice superseding indictment highlighted:

“Defendant LEFT placed orders to begin closing out his short CRON position approximately 24 minutes after posting the first tweet. By the close of the trading day, defendant LEFT had a net short exposure of approximately 348,900 shares — a reduction of approximately 61 percent of defendant LEFT’s total pre-CRON tweet position.”

“After the close of market, defendant LEFT appeared on CNBC’s ‘Fast Money’… LEFT was directly asked — twice — about his own position in CRON. The host followed up and asked, ‘Are you just as short the stock right now as you were at the beginning of the day?’ Defendant LEFT falsely stated that he only covered a ‘small size’ of his short position in CRON earlier that day when, as defendant LEFT then knew, at the time of his appearance on CNBC, he had already closed more than 60 percent of his pre-tweet positions.”

The August 30, 2018 CNBC interview with Andrew Left on Cronos lasted eight minutes and started at 5:30 pm ET. The relevant portions about trade positioning are transcribed below:

CNBC Host Melissa Lee: “I have to ask you this right off the bat, are you still short Cronos right now, or did you cover?” (1:58)

Andrew Left: “Oh, I am definitely still short the stock, no doubt.” (2:03)

Melissa Lee: “Last question Andrew, you’re short, you say you remain short, when did you put that short on and will you take that short down to $3.50?” (9:16)

Andrew Left: “Oh, I don’t, come on Melissa. You always ask that question and it’s irrelevant when I put it on or when I’m going to take it off. What’s relevant is the information that’s in the report.” (9:24)

Melissa Lee: “Here’s what’s relevant to people watching. Are you just as short the stock right now as you were at the beginning of the day?” (9:31)

Andrew Left: “Uh, I took a small size of the position off today. Yes. But I am still extremely short the stock. I believe the stock trades down to where it was just three weeks ago, $6. And then right down to $3.50.” (9:38)

After reading the indictment and reviewing Andrew Left’s statements, my initial view was that Andrew Left covering 60% of his short position and then telling an interviewer he “took a small size of the position off” is misleading and morally wrong, but not criminal.

After attending the trial, hearing the defense, and reviewing the evidence, I would argue the Department of Justice’s statements are more misleading than those of Andrew Left.

The defense disclosed that Andrew Left only reduced his position by 19% compared to his position in the morning, and that the 61% reduction was relative to an intraday position high, not to the initial start-of-day position, as he was asked. In addition, Andrew Left maintained a short position through September 12, 2018, until what appeared to be a short squeeze in the sector, and continued to trade in and out of stocks in the industry.

Does the prosecution believe that, when the media asks about a position, a trader must provide not just a literally true answer but an answer addressing every reasonable interpretation of the question?

The natural consequence of prosecuting true, partially misleading, or even false media statements is not more truth, but less public participation and less transparency, which will make an opaque industry even darker.

With his Cronos report, Andrew Left brought correct information to the market, traded in a manner consistent with other short activists, and disclosed trading around his report when repeatedly asked. Andrew Left got it right.

The defense also highlighted that Andrew Left was never told by regulators or lawyers that he needed to disclose his trading, filed two whistleblower petitions with the SEC regarding his research, and sought out former SEC Chairman Harvey Pitt to review Citron’s report on Grand Canyon Education. The defense commissioned a review from AlixPartners that found over 90% of Andrew Left’s rapid entries and exits in stocks were not related to published commentary, meaning he privately traded short-term most of the time and not just around public statements. The defense also argued in the one instance where Andrew Left was given money from an outside hedge fund it was not compensation for publishing a report, but instead his share of a trade the fund executed on his behalf because the fund had secured borrow on a hard-to-borrow stock for him. Emails presented by the defense supported this narrative.

Other issues with the prosecution included alleging Andrew Left caused Facebook’s 8% stock rise on December 26, 2018 when it was actually one of the market’s best days in history, calling Andrew Left a financial advisor when he is not one, fighting to conceal his 2017 New York Times profile which openly disclosed his trading and outside collaborations, alleging he did not care about being right because he profited from short-term stock movements that, in reality, only could occur with a long-term track record of being right, claiming Andrew Left used limit orders maliciously, when he actually used them sparingly, and advancing the spurious notion that giving advance notice of reports was suspicious when it was a natural consequence of collaboration on ideas.

The bottom line of the defense was:

“Intent to profit is not intent to defraud.”

When the jury was sent to deliberations, I was confident and hopeful the jury would find Andrew Left not guilty on all counts. I was very wrong.

After the guilty verdict on 13 of 17 counts, one hedge fund manager asked me why I thought Andrew Left lost the trial: where did he lose the case? The truthful answer is I don’t know.

I viewed Andrew Left’s testimony as one of the strongest parts of his defense, as well as the testimony of defense expert Professor Andrew Verstein. However, the defense’s closing arguments were probably the weakest, poorly delivered and overcomplicated, while the prosecution had superb delivery on closing arguments and kept the narrative simple: Andrew Left traded “opposite” and made millions.

A cynic may argue abnormalities with the jury. Three of the four alternates were used or dismissed as jurors had to leave for various reasons during the trial. At the start of deliberations, the last alternate notified the court of essential work matters that would interfere with his obligations, and one juror who remained on apparently had a father in the hospital. After nearly three weeks of trial, the jury deliberated for just two full days.

However, I don’t think poor closing arguments or a rushed jury is what lost the case. To me, what lost the case was that a jury of hardworking, educated Americans saw a man make over $20 million, did not identify with him, did not like the concept of trading around reports, and wanted to send a message that this easy money was wrong.

I believe you could have put the conduct of almost any other activist short seller on trial and gotten the same verdict.

How long until we find out who is next?

Two days ago, a prominent venture capitalist told Bloomberg, “I will hold my SpaceX shares forever.” What if he doesn’t? What if he sells some in three months? Is that a crime? Who decides?

What if a CEO speaks bullishly about his company and then sells stock? Almost all do.

In June 2022, multi-billion-dollar ETF operator ARK Invest published:

“ARK’s Expected Value For Zoom Video Communications In 2026: $1,500 Per Share”

Zoom went on to fall ~20% and now trades for around $87 per share. ARK Invest sold down its Zoom position in 2024, far below its stated price target. Is this securities fraud?

Should the government monitor everyone’s public statements in the public markets to determine people’s intent?

Is it better to be wrong, as long as the government believes you had the right intentions?

In August 2019, one short seller called General Electric “a bigger fraud than Enron.” Its stock has since risen roughly tenfold.

In September 2019, another short seller compared Bloom Energy to “Theranos or Solyndra.” Its stock has since risen roughly 60x.

In June 2024, a different short seller called Lasertec Corporation “a Colossal Fraud and Ticking Time Bomb.” The stock just reached all-time highs.

None of these were written by Andrew Left, all caused large intraday declines, all were ultimately judged wrong by the market, and none were judged wrong by the government.

We should have regulations that make it easy to do the right thing, difficult to do the wrong thing, and clear when the line between right and wrong is crossed.

Andrew Left’s fight is about the right to write, right to speak, and responsibility to combat government overreach.

Andrew Left was right to tell CNBC he covered some of his Cronos position and has the right to not reveal more than that.

Andrew Left got Tesla right, and Facebook right, and Nvidia right, and Namaste right, and Cronos right, and Beyond Meat right, and General Electric right.

If Andrew Left’s conviction stands, then in the eyes of the government it doesn’t matter whether what you write turns out right, what matters is if the government believes you are sincere in what you write. What gives government that right?

I hope with time the courts will right this wrong and restore the rights of Mr. Left.

Cautious investing to all.

Further Reading

“The Unjust Prosecution of Andrew Left (Part 1)” (June 4, 2026)

“In Defense of Andrew Left” (July 29, 2024)

This article is not investment advice and represents the opinions of its author, Edwin Dorsey. You can reach the author by email at edwin@585research.com or on Twitter @StockJabber. This article is for subscribers of The Bear Cave newsletter. If this article was forwarded to you, please consider becoming a paid subscriber to receive articles like this twice every month. Learn more here.

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New Activist Reports

Hunterbrook Media published on Ensign Group (NASDAQ: ENSG — $8.73 billion), a large nursing facility roll-up. Hunterbrook alleged that Ensign’s “numbers are a mirage” and that understaffing at its facilities leads to positive financial results and negative patient outcomes. Hunterbrook wrote, in part:

“In just 5 months where data was available, Ensign shorted residents 5M+ hours of nursing care. It seeks out the sickest patients for higher reimbursement from the government, then staffs below what that payment is calibrated to support.”

Hunterbrook estimated that insufficient staffing “saved Ensign about $386M (annualized) in 2024 — more than its entire reported net income that year of $298M” and also alleged that Ensign’s quality metrics “beat the average on the numbers it self-reports with no documentation procedures imposed by CMS — and falls below it on many of the numbers the government verifies.”

Following the investigation, Ensign stock fell ~8% and Hunterbrook released a long-form video about the alleged misconduct.

Three days after Hunterbrook, Muddy Waters Research published on Ensign Group and alleged the company “rents Administrator licenses to deceive CMS” and that proper compliance would “cut 2027 EBIT ~35% vs consensus.” As part of its research, Muddy Waters made unannounced visits to 57 Ensign facilities and “obtained the consulting agreement Ensign apparently uses to rent licenses” at many of its facilities. Muddy Waters also “independently corroborated billing for therapy never rendered.”

The Muddy Waters report included a “Left Disclosure” referencing the recent criminal prosecution of Andrew Left for trading around reports. The disclosure stated:

“‘Left Disclosure’: As of the time and date of this report, Muddy Waters is short the securities of, or derivatives linked to Ensign Group, Inc. (ENSG). Upon publication, we intend to begin covering a substantial majority – possibly all – of our short positions. As we elaborate below, our risk reduction is not a reflection of a lack of conviction in our opinions or the facts presented; rather, it has to do with managing risk in a manner that is prudent for a fiduciary of our investors’ money.”

Fuzzy Panda Research published two updates on T1 Energy (NYSE: TE — $2.37 billion), a clean battery solutions company formerly known as FREYR Battery. Fuzzy Panda claimed it received documents from a whistleblower showing that T1 has extensive ties with Trina Solar, a company recently added to the U.S. Department of War’s list of Chinese military companies operating in the United States.

Viceroy Research published on Abaxx Technologies (Toronto: ABXX — CAD$1.76 billion), a Canadian financial infrastructure company building a futures exchange in Singapore for physically-deliverable contracts for energy, battery metals, carbon credits, and precious metals. Viceroy alleged that Abaxx’s exchange volume “is comprised of wash-traded churn sustained by incentives, which collapses the moment incentives are switched off” and speculated that exchange volume is driven, in part, by undisclosed related parties. Viceroy also said that CBOE walked away from its “strategic investment” in Abaxx.

On Twitter, Abaxx CEO and founder, Josh Crumb, called the report part of a “short and distort conspiracy” and alleged, in part:

“~half of all volume for better parts of full months is short selling and bid whacking, stuffing PR opens and failing to deliver etc, but price doesn’t go down much, so they solicit Canadian bank sales desks and the HF street in a flimsy ‘idea’ to join the short, focusing a lot of the pitch on personally attacking the CEO.”

Mr. Crumb also raised concerns about the conduct of “bad actors” in the activist short space.

Recent Resignations

Notable executive departures disclosed in the past week include:

1. CFO of Grocery Outlet (NASDAQ: GO — $948 million) is retiring after one and a half years. In addition, the company’s Chief Merchandising Officer is departing after one year. The company has had three CEOs and four CFOs in the last five years.

2. CFO of Credit Acceptance (NASDAQ: CACC — $5.73 billion) “decided to retire” at the age of 52 after two and a half years. The subprime auto lender is audited by Grant Thornton.

3. CEO of Perrigo (NYSE: PRGO — $1.52 billion) resigned after nearly three years and departed the board following “a determination by the board that certain personal conduct was not consistent with the company’s code of conduct and core values.”

4. CFO of Adobe (NASDAQ: ADBE — $82.4 billion), Daniel Durn, “is departing the company to pursue a new professional opportunity” after nearly five years. Mr. Durn is becoming the new CFO of Marvell Technology (NASDAQ: MRVL — $245 billion), where he has served on the board for the last two years. In March, Adobe announced its CEO would step down after 18 years once the company identifies a successor. That search remains ongoing.

5. CFO of Summit Hotel Properties (NYSE: INN — $672 million) resigned “effective as of June 15, 2026” after five years and entered into a separation agreement that includes “a consulting fee of $25,000 per calendar month” for the next three and a half months. The REIT has a total return with dividends reinvested of +19% since its February 2011 IPO vs +635% for the S&P 500.

6. CFO of Cannae Holdings (NYSE: CNNE — $634 million) resigned with immediate effect after nearly six years. In May 2025, the Las Vegas-based holding company switched auditors from Deloitte to Grant Thornton. Today, the company is overseen by a 14-person board.

7. Mr. William Dabbs Cavin, board member of Open Lending Corp (NASDAQ: LPRO — $258 million), resigned “effective immediately” after just five days. Mr. Cavin had been appointed s in connection with “a cooperation agreement” between Open Lending and Palogic Value Management. The company has had four CEOs and four CFOs in the last five years.

8. Chief Operating Officer of AGNT Inc (NASDAQ: AGNT — $761 million), formerly eXp World Holdings, departed with immediate effect after nearly four years. In April 2022, The Bear Cave raised concerns about the company’s “dubious accounting, regulatory snafus, an SEC subpoena, high insider selling, and a questionable recruiting pipeline promoted by a prominent Scientologist.” The company has since fallen ~75%.

Data for this section is provided by VerityData from VerityPlatform.com

News of the Week

“The 24-Year-Old AI Wiz Who Counts Jane Street as an Investor” (WSJ)

“Situational Awareness has gained about 270% after fees this year through May and is up more than 1,000% after fees since inception, one of the people said. One of the fund’s most successful bets is a stake in Anthropic that today accounts for about one-fifth of its assets, the person said.”

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New Activist Reports

NINGI Research published on Sivers Semiconductors (Stockholm: SIVE — 23.3 billion SEK), a Swedish semiconductor and optics company. NINGI called the company “a retail-driven pump built on speculative hyperscaler links, a fabricated bottleneck narrative, and a rumored volume ramp-up.” NINGI cited the company’s history of overpromising, a 7x increase in audit fees that may be associated with changes in its revenue recognition policy, and the apparent loss of important customers and partners. NINGI also highlighted that insiders have sold ~29 million shares from March to May 2026 and wrote:

“The largest seller: Achilles Capital, controlled by SIVE board director Erik Fällström. Sept 2025: 28M shares. March 2026: 13M. May 7, 2026: ZERO. He called SIVE ‘significantly undervalued’ on Swedish TV the same week his fund was liquidating.”

Grizzly Research published on Pirelli & C. S.p.A (Milan: PIRC — 6.51 billion EUR), an Italian tire company. Grizzly alleged that the company’s “close relationships with Russia pose a threat to western national security” and that “about 10% of Pirelli’s profits come from its Russia business.” Grizzly wrote, in part:

“Other tire manufacturers Nokian, Michelin, Continental, Goodyear, and Bridgestone all sold their Russian operations after the start of the invasion of Ukraine and accepted major write-downs as well as negative stock impacts. Pirelli is the only Western tire maker still manufacturing in the country.”

Pelican Way Research published on CitroTech (NYSE: CITR — $145 million), a company attempting to make next-generation fire retardant. Pelican Way alleged the company “is being brought to the market by various promoters who are luring investors into a trap built on a three-decade-old product that has never been commercialized at scale.”

Fugazi Research published on Astrotech (NASDAQ: ASTC — $60 million), a now space company that has repeatedly pivoted industries with a history of “$262 million of destroyed shareholder value, $1 million of annualized revenue, and a balance sheet for just about 4 months of cash runway.”

Recent Resignations

Notable executive departures disclosed in the past week include:

1. CFO of Penguin Solutions (NASDAQ: PENG — $3.04 billion) resigned “effective as of July 8, 2026, to pursue another opportunity in a different industry” after two years.

2. CEO of MillerKnoll (NASDAQ: MLKN — $1.01 billion), Ms. Andi Owen, “will retire on June 30, 2026, as mutually agreed with the Board” after nearly 8 years. Ms. Owen previously drew public ire after telling employees in a town hall to “leave pity city.”

3. Chief Accounting Officer of Ocugen (NASDAQ: OCGN — $433 million) resigned with immediate effect after four months. The clinical-stage biopharmaceutical company has had seven CFOs in the last five years.

4. Chairman of Lotus Technology (NASDAQ: LOT — $783 million) “has chosen to step down due to personal reasons” after four and a half years. The Chinese luxury electric vehicle company has had two additional board departures over the last year and is down ~90% since its February 2024 SPAC merger.

5. Mr. Reid Hoffman, board member of Microsoft (NASDAQ: MSFT — $3.10 trillion), said he would “not stand for re-election at the Company’s 2026 annual shareholder meeting” after nearly ten years. Following the resignation, Katie Miller, wife of the White House deputy chief of staff, Stephen Miller, tweeted “Is it because he’s being investigated by the FBI?” without providing additional details. Mr. Hoffman has come under criticism for his ties to Jeffrey Epstein.

Data for this section is provided by VerityData from VerityPlatform.com

News of the Week

“A Short Seller’s Fraud Conviction Is Spooking Wall Street” (WSJ)

“‘If you’re somebody who believes you’re going to have an impact on a stock, you have to think twice about how you trade around a position that you speak about,’ said Nate Koppikar, portfolio manager at short-selling hedge fund Orso Partners. ‘That has to be the softest interpretation.’”

“Canada’s TerraVest slides as chairman accused of insider tipping” (Bloomberg)

“Shares of Canadian manufacturer TerraVest Industries Inc. fell the most since 2009 over allegations of insider tipping by its executive chairman.

The Journal de Montreal reported that Charles Pellerin helped family members and acquaintances make illicit gains by communicating privileged information ahead of a deal in March 2025. The news outlet cited a copy of a search warrant from Quebec’s financial regulator, the Autorité des Marchés Financiers.”

“Financial publishing under fire – 18 tips to prepare” (Swen Lorenz)

“My own approach was to become the legal equivalent of a prepper. Before publishing my first article, I created a folder documenting the legal precautions and regulatory standards I intended to follow. At the time, this seemed paranoid and excessive. Later, it proved to be neither.

Eventually, I received an enquiry from a financial regulator asking me to explain how Undervalued-Shares.com complies with relevant regulations.”

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“I think that’s a terrible definition of market manipulation and I would flunk a student who used it as an example.”

During the trial of Andrew Left, defense expert Professor Andrew Verstein opined that trading around truthful reports and tweets is not market manipulation because it excludes the heart of manipulation: falsity. Professor Verstein further argued that activist short sellers and market commentators don’t need to disclose their positions and that what makes stock commentators credible is their arguments, evidence, and track record, not their trading.

Professor Verstein serves as faculty co-director of the Lowell Milken Institute for Business Law and Policy, specializes in market abuse, and, in April, testified before Congress on “Combatting Fraud and Exploitation in Capital Markets.”

Professor Verstsein’s reasoning made sense to me; his credentials were as strong as could be, and I believed his testimony supported a not guilty verdict on the charges of market manipulation.

Ultimately, a jury of twelve disagreed and convicted Andrew Left on 13 of 17 charges of market manipulation and securities fraud.

I was sad and surprised by the verdict. I’ve known Andrew Left for nearly a decade and consider him equal parts friend, mentor, and personal hero.

I have closely followed the activist short landscape since I lost money investing in Valeant Pharmaceuticals my senior year of high school. In college, I interned for short-focused hedge funds and the SEC Enforcement Division, and for the last six years I have authored this newsletter, which involves reading and summarizing nearly every activist short report. I regularly talk with reporters, market participants, activist short sellers, and lawyers in the industry and spent the last two weeks attending the majority of Andrew Left’s trial in person.

I believe the prosecution of Andrew Left was unjust, his conviction an incorrect verdict, and his trial one that will have enormous impact on activist short sellers, market commentators, and free speech in our country.

The trial of Andrew Left was less a trial of Andrew Left’s actions and more a prosecution of the activist short-selling business model. It was filled with misleading statements, a poor grasp of activist short-selling norms, and a preference for narrative over truth.

Take, for example, Mr. Bill Essayli, the First Assistant U.S. Attorney for the Central District of California, whose office criminally prosecuted Andrew Left. After the verdict, Mr. Essayli tweeted, in part:

“A Los Angeles federal jury has found Andrew Left guilty of market manipulation. He used media appearances and his company to illegally influence share prices and make quick profits, known as shorting.” (My emphasis)

Mr. Essayli later added, in part:

“Short selling is not a crime. Mr. Left was convicted of fraudulently manipulating the market, not for ordinary short selling… Retail investors relied on and invested in positions based on Mr. Left’s representations, to their detriment…

There was overwhelming evidence that this was not ordinary trading, but a strategy designed to take quick profits through social media posts motivated by his desire to make a quick buck.” (My emphasis)

The idea that retail investors suffered due to Andrew Left’s conduct was a recurring theme throughout his trial. But is it true?

The Department of Justice press release retweeted by Attorney Essayli highlights only one manipulative “recommendation” by Andrew Left: a bullish tweet about Nvidia on November 20, 2018. The Department of Justice wrote, in part:

“Left took financial positions in Nvidia, including short-dated call options that expired three days later. Short-dated options can offer quick profits if a stock suddenly moves in the narrow timeframe before expiration.

Left then promoted Nvidia as a favorable investment on Citron’s Twitter account, stating, ‘Citron buys $NVDA. This is the first time in 2 years stock offers an appealing risk-reward to investors . . . We see $165 before we see $120.’ At the time, Nvidia’s stock was trading at approximately $143.64. The tweet was reported on by major media outlets.”

Since then, the stock has risen ~6,000% and has split twice. Which retail investors were harmed by Andrew Left’s bullish tweet on Nvidia in November 2018?

This is no isolated incident. At the time of indictment, Sherwood News reviewed the stock tweets and reports that Andrew Left was criminally charged for and found that, on average, the stock picks “outperformed the S&P 500 by 3.7x since August 2018.”

Investors who relied on Andrew Left for stock picks benefited. Investors who ignored Andrew Left did so to their detriment. In fact, one prosecution witness, retired firefighter Billy Banks, invested in cannabis company Namaste, ignored Citron’s report calling the company a fraud, and lost money, yet still blamed Andrew Left.

Andrew Left was right about being bullish on Nvidia in November 2018.

Andrew Left was right to tell investors to “back up the sleigh” on Facebook in December 2018.

Andrew Left was right to call Namaste a fraud in September 2018.

Andrew Left was right when he told the public Tesla was “too compelling to ignore” in October 2018.

And Andrew Left should have the right to make short-term trades around his own commentary.

The jury decided no.

What struck me most while attending the trial was how much of the alleged misconduct was simply the industry standard practice of activist short sellers: do research, take a large short-term position, release information to the market, and quickly close part or all of your position.

The prosecution called it “trading opposite,” the defense called it “catalyst-based trading,” and Mr. Essayli called it “a strategy designed to take quick profits through social media posts motivated by his desire to make a quick buck.”

This practice of short-term trading around reports is common. Often, short activists will also use outside partners, “balance sheet partners,” to trade short-term around short reports and get a cut of the profits.

Don’t take my word for it. Simply look at the disclaimers of many prominent short activists, many of which were updated after Andrew Left’s indictment.

Muddy Waters Research: “As of the time and date of each report, Muddy Waters (defined below) is short the securities of, or derivatives linked to, the securities of the subject issuer, unless otherwise stated in the report. Upon the publication of each report, we intend to begin covering a substantial majority of our short positions…”

Wolfpack Research: “You are reading a short-biased opinion piece. Obviously, we will make money if the price of the covered issuer stock declines… Upon the publication of each report, we intend to begin covering a substantial majority of our short positions…”

NINGI Research: “NINGI Research LLC and NINGI Research LLC Related Persons are likely to immediately transact in the Subject Name’s securities (by increasing and/or decreasing positions and/or risk exposure) …”

Manatee Research: “Manatee Research and the Manatee Research Affiliates may cover some or all their short positions immediately after the publication of this report or an indefinite period after its publication… by the time you read this report, we may be covering or have already covered our short position…”

Morpheus Research: “Morpheus Research’s investments are subject to its risk management guidance, which may result in the de-risking of some or all its positions at any time following publication…”

Grizzly Research: “You should assume that upon publication of any report, we will, or have begun to, close a substantial portion – possibly the entirety – of our positions in the covered issuer’s securities.”

Fuzzy Panda Research: “Fuzzy Panda and the Fuzzy Panda Affiliates may cover some or all of their short positions immediately after the publication of this report or an indefinite period after its publication.”

Culper Research: “You should assume that following publication of any research, we are likely to immediately transact in these securities…”

Hindenburg Research: “Hindenburg’s investments are subject to its risk management guidance, which may result in the derisking of some or all of its positions at any time following publication of any report…”

Or take this August 2024 disclaimer from Kerrisdale following the Andrew Left indictment:

“Prior to this complaint, Kerrisdale’s understanding of securities law was that by not releasing false or misleading information in one’s communications and by disclosing to the public that one is long or short a given security, and therefore biased, that there needed to be no restrictions on one’s trading of the covered security… But, in light of this complaint, and following its logic, perhaps it would help investors to just assume the following: assume we have shorted lots and lots of the stock of the Covered Issuer immediately prior to publication, and assume we will buy lots and lots of the stock of the Covered Issuer to cover our short position immediately subsequent to publication…”

In sum, nearly all major activist short sellers either explicitly disclose or imply engaging in the short-term trading pattern for which Andrew Left was criminally prosecuted.

If the guilty conviction stands, it is an open question whether this trading will be allowed and whether these disclaimers will be sufficient.

During the relevant 2018-2020 time period, Citron had both a website disclaimer and a disclaimer included in most reports that disclosed Citron and related persons “may transact” in covered securities post-publication and that Citron has no obligation to update the public on its holdings post-publication.

At the time, Citron’s disclaimers were industry standard. In fact, a January 2019 email from John Gerald Martel, Citron’s outside counsel, revealed Citron’s report disclaimer was “based heavily on the Muddy Waters disclaimers,” and Andrew Left later testified his website disclaimer was based on one from TheStreet.com.

Among the government’s arguments was that the word “may” in “may transact” was misleading because the government alleged Andrew Left knew he would transact and should disclose he “will transact” rather than “may transact.” In addition, the government noted that Citron’s website’s legal disclaimer page accounted for only 0.22% of the website’s overall views.

Beyond ambiguous disclosure standards, all stock commentators are left with a question: how long do you need to hold a stock until you can trade out of your position after expressing a public view?

One day?

One week?

One month?

Three months?

Until your target price is hit?

What if your target price is never hit? Do you need to hold forever?

Does it depend on the medium? Are tweets the same as reports? Are CNBC appearances the same as podcast appearances?

What if you use a balance sheet partner to trade on your views? What are the restrictions on balance sheet partners, friends, friends of friends, and employees?

What if a hedge fund shares a research tip or collaborates with an activist short seller? What restrictions do they have on trading around reports or stock commentary?

Can you short-term trade around mainstream news stories where you are a source?

What if you don’t know when a story will be published, but you know one is coming?

Do trading restrictions only apply to market-moving participants? Credible commentary that moves markets has restrictions, but non-market-moving commentary has none?

If the government wants to criminalize trading that it views as inconsistent with public commentary, then it should offer clear guidance to all.

Because we have none, our best understanding of the government’s views comes from the trial of Andrew Left.

Let me take you into courtroom 8C of the First Street Courthouse in downtown Los Angeles. The Honorable Virginia A. Phillips is presiding, and a dozen lawyers, fourteen jurors, and one defendant sit before her.

This article represents my own opinions based on my observations, handwritten notes from the trial, industry knowledge, and conversations with others.

The First Street Courthouse is a modern one. It cost $350 million to build and was completed in 2016. The courtrooms are large, modern, and tech-savvy. Every juror had a screen in front of them, along with screens for every attorney, the witness stand, the judge, and two large TV screens for observers in the gallery. Throughout the case, exhibits would be digitally displayed, replaced, circled, highlighted, enlarged, and in one case hastily removed.

Representing the government were Andrew M. Roach, Benedetto L. Balding, and Matthew Shawn Reilly. Mr. Roach, a Harvard Law graduate, was the strongest by far, with sharp cross-examinations, command of the courtroom, and zealous advocacy for the government’s views.

The defense was led by Eric Rosen, a founding partner of Dynamis LLP who was formerly the prosecutor in the Varsity Blues admissions scandal, and Adam Fee, a former prosecutor and current partner at Weil, Gotshal & Manges LLP specializing in white-collar defense cases.

Rosen and Fee both come across as competent and prepared, with several supporting attorneys at their table. Rosen is tactical, often taking a winding road on cross-examination that culminates in severe blows and embarrassing revelations against the government’s witnesses and experts. Fee is the opposite, taking a direct and aggressive approach in his questioning.

Rosen, like the prosecutors, at times seemed to stumble on the nuances of financial concepts. His weakest point was the defense’s closing arguments, which left much to be desired. Fee seemed to grasp the financial nuances better than any attorney in the courtroom. His weakest moments, typically outside the jury’s presence, were fights with the judge over the length of his cross-examinations.

Judge Virginia A. Phillips, 69 years old, took a less-is-more approach during the trial. Her most notable decision was a 2010 worldwide injunction against the U.S. military’s “don’t ask, don’t tell” policies. During the trial, Judge Phillips’s knowledge of financial concepts was weak. For example, Judge Phillips refused to allow the defense to show a split-adjusted stock chart of NVDA on the prosecution’s objection that split-adjusted prices are “current” prices.

The trial included four experts, two for the prosecution and two for the defense.

Mr. Ross Waller, a former Bridgewater executive, and Dr. Matthew Cain, a former SEC financial economist from 2014-2018 and now senior fellow at Berkeley, testified for the prosecution. Professor Andrew Verstein and Mr. Martin Dirks, an Adjunct Professor at Golden Gate University and former portfolio manager for Harvard University’s endowment, analyst at Odyssey Partners, and analyst for the Feshbach Brothers, testified for the defense.

Waller had emailed the prosecution to offer his expertise and said he volunteered 1,000 hours of work on the Andrew Left case, all without any compensation. Waller previously testified in several government prosecutions, also without compensation. He was a noticeable presence on the government’s side after testifying, often arriving at court early and staying late to watch the trial. During breaks, Waller would occasionally be joking with the prosecutors.

Dr. Cain was more matter-of-fact. He received a gross contract value of approximately $370,000 for his work on the Andrew Left case, and testified he has received approximately $4 million in total expert contracts since leaving the SEC. Dr. Cain noted that gross contract values are before expenses such as staff and paying for market data.

Both Mr. Waller and Dr. Cain struggled at times during cross-examination. For example, Waller said, “I don’t know if I can comment on SPACs in any sort of educated way” when asked about Left’s trading in a deSPACed company. Likewise, Dr. Cain struggled to recollect the relevance of Stan Druckenmiller when questioned about Citron’s bullish GE report that, in part, mentioned a recent GE stock purchase by Druckenmiller.

The prosecution used Mr. Waller and Dr. Cain to emphasize the short-term nature of Andrew Left’s trading, with charts showing how Andrew Left would aggressively build up a position before a tweet or report, and often quickly reduce the position after a market reaction to the tweet or report. Dr. Cain argued that truthful tweets can constitute market manipulation, and the government painted these trading patterns as signs of bad intent and of trading “opposite” to public commentary, while the defense cast them as prudent risk management and necessary to avoid short squeezes.

The defense would often highlight specific macroeconomic factors that influenced price movements, while the prosecution tried to attribute stock moves entirely to Left’s tweets and reports. The prosecution painted Left’s trading around reports and tweets as a pattern, while the defense argued that the experts only analyzed a small subset of trades cherry-picked by the prosecution.

The strongest cross-examination was from Eric Rosen on Ross Waller. Waller admitted he did not look at Left’s full trading history and that “the prosecutors gave me a list of tickers and a bunch of tweets” for his analysis. Waller also seemed unaware Left was a sub-advisor for Atom Investors and did not take those trades into consideration for his analysis.

By the end, Waller said:

“I’m not opining on intent.”

Rosen quickly replied:

“Sir, what are you opining on?”

Rosen noted that trading strategies were a form of intent and wrapped up the cross-examination. Waller left defeated, doing deep breaths with inflated cheeks, looking straight down as he exited the courtroom.

The prosecution also brought in professional Wall Street analysts to portray Left’s reports as unprofessional and lacking rigor, and Dan Backus, the CFO of Grand Canyon Education (NASDAQ: LOPE), to discuss alleged errors in Citron’s reports and the negative impact short reports had on the company.

In a strong moment for the prosecution, Mr. Backus highlighted a Citron allegation based on a UCC filing that the company “is taking out more and more debt securitized by virtually every asset.” Upon investigation, Mr. Backus told the jury that the UCC filing concerned an immaterial lease by Grand Canyon University for golf carts to be used at the university’s golf course.

A common theme in the prosecution was the alleged chaos that short reports would cause for investors and company executives in the immediate aftermath. The prosecution did not devote much effort to alleged errors in Citron’s content, aside from potential missteps in the Grand Canyon Education reports.

The prosecution also questioned Citron’s website manager, who helped format reports and prepare email blasts for Citron’s 10,000-15,000 person Mailchimp list. Most reports during the 2018-2020 time period got around 10,000 pageviews, and the website manager testified Left cared about accuracy, would often ask him to stay available during the day in case a report needed to be updated, and noted that the final reports would be titled anywhere between version 22 to version ~55, a sign Left had spent much time revising the reports.

Another prosecution witness, retired investor John Noonan, testified as a self-described retail investor and said he would watch Left occasionally on CNBC. Mr. Noonan disclosed he had been trading ROKU stock actively when he heard Left call ROKU “uninvestable”, saying it was one of the strongest words you could use when describing a stock. Mr. Noonan also said he did not view Left’s tweets as recommendations in many cases, but would have wanted to know Left’s trading when interpreting his commentary.

The defense’s case for Andrew Left was much briefer.

The defense began with Professor Andrew Verstein. He was soft-spoken and relaxed, and he held the jury’s full attention. He seemed to have the best command of securities law and financial logic of all participants in the trial. Professor Verstein disclosed that he was paid a $20,000 retainer at $1,200 per hour, but joked that he would need to give some of it back, given that he only worked ~11 hours on the case.

On trading around research, Professor Verstein opined that if a person does research, invests, shares their research, and closes their position… “That’s normal.”

And on the topic of revealing positioning, Verstein made the point that “There are things people want to know that you don’t need to tell” and testified:

“In general, people don’t need to say things when they trade. [You] don’t need to disclose things the other side wants to know.”

Verstein also took the view that “If a stock moves within minutes, it’s a sign of a credible publication” and that it was normal and healthy for true information to move markets, and immediate moves are a sign someone has a good reputation, not manipulation.

Andrew Roach’s cross-examination of Verstein was aggressive, and the angle was clear: Roach noted Verstein spent much less time working on the case than the government’s experts like Waller, who spent ~1,000 hours.

Roach also highlighted a February 12, 2020 “Petition for Rulemaking on Short and Distort” that Verstein had signed along with 11 other law professors. The petition cited a GE short report by Harry Markopolos that called GE a “bigger fraud than Enron.” (Incidentally, Andrew Left went long GE following the incorrect short report, and was indicted, in part, for bullish GE trades.)

Roach noted that the letter asked the SEC “to clarify that rapidly closing a short position after publishing (or commissioning) a report, without having specifically disclosed an intent to do so, can constitute fraudulent scalping in violation of Rule 10b-5.”

Verstein noted that the suggestions were never adopted by the SEC and that he did not agree with all the proposals in the letter, but signed it given he thought, on balance, the letter had more positive suggestions than negative ones.

Roach’s cross-examination emphasized disclaimers. Roach asked:

“Did you see any disclaimers on the defendant’s tweets?”

Verstein replied:

“Tweets don’t generally have disclaimers.”

Roach also initially tried to discuss Citron’s disclaimer but had trouble finding the relevant passage given the disclaimer was lengthy. Roach initially said:

“I won’t go through the language because I can’t find it.”

Verstein replied:

“If you want to talk about part of the disclaimer, we should find it.”

Later, Roach argued “When you phrase things as may when you know it to be true, it is misleading under securities law” and reiterated the word “may” in “may continue to transact” in Citron’s disclaimer was misleading given Citron allegedly knew it would transact immediately following publication.

Roach also asked whether activist short-selling “in a fraudulent manner” is illegal.

On re-direct, Rosen highlighted that the SEC never adopted the view that rapidly closing positions post-publication was fraud. Verstein also added that he signed the letter because he liked the idea that when short-sellers take a large position and change their view “they should disclose at some point.”

On the topic of disclaimer, Verstein opined that it would be “insane” to say you “will” trade a certain way and agreed the word “may” was appropriate in Citron’s disclaimer.

Rosen also asked:

“Are you well versed in market manipulation?”

To which Verstein replied:

“I pride myself on being perhaps the most well-versed.”

The defense’s second witness was Jack Martel, Citron Capital’s outside counsel who has spent the last 20 years advising funds.

On direct examination by Rosen, Mr. Martel acknowledged that Citron Capital had waived the attorney-client privilege to permit him to testify.

Rosen asked:

“Did you ever advise Citron that catalyst-based trading was unlawful?”

Mr. Martel replied:

“No.”

Rosen asked:

“Did you ever offer an opinion on how long they needed to hold after releasing a catalyst?”

Mr. Martel replied:

“Yes, there was no holding period.”

Mr. Martel added that his opinion was based on his review of existing law at the time and that he helped draft Citron’s disclaimer based on the existing disclaimer of Muddy Waters.

On cross-examination, Mr. Roach emphasized that Mr. Martel did not review individual trades, barely interacted with Andrew Left, and instead interacted with Left’s analyst Ryan Choi.

In what became the most heated moment of the trial, Mr. Roach began to probe Mr. Martel on whether he had full and complete disclosures from Andrew Left and Ryan Choi. Mr. Roach began insinuating that Citron-related documents had been deleted, and Judge Phillips ordered a sidebar after the defense objected.

After the sidebar, Mr. Roach resumed his insinuations about Ryan Choi’s communications with Andrew Left, and the government quickly put up a series of text messages. The first text message on the chain was from Ryan Choi, who wrote:

“History cleared.”

Immediately, there was some commotion in the courtroom, and the exhibit was ordered to be taken down.

Rosen became impatient and said sternly:

“Please take that down.”

Once the exhibit was taken down, Judge Phillips said the prosecution could continue.

For the only time in the trial, Rosen, who was seated closest to the gallery, was enraged. As Roach began to speak again, Rosen, with fury, exclaimed:

“I object to whatever they are saying.”

Judge Phillips ordered a second sidebar, and every attorney save one stood up. The second sidebar on deleted documents and lawyer communication was even further removed from the jury than usual and lasted approximately 10 minutes. It’s unclear what happened, but when Roach returned, he looked rattled. Neither Judge Phillips, Roach, nor Rosen referenced the text messages that were shown to the jury.

Roach asked just one more question before returning to his seat.

The defense would later file a motion for mistrial.

The mistrial motion said, in part,

“The Sixth Amendment guarantees every defendant in this Court ‘the right to be confronted with the witnesses against him.’ It is one of the oldest and most fundamental safeguards in American criminal law. It does not bend to convenience. It does not yield to trial strategy. It cannot be sidestepped by careful phrasing. On Friday afternoon, in this courtroom, the government violated Andrew Left’s rights under the Constitution in an act of prosecutorial misconduct. Mr. Left has been incurably prejudiced. The only remedy is a mistrial and dismissal with prejudice…

After six years of investigation, a superseding indictment, and two weeks of trial, the government has presented its case-in-chief. It chose its witnesses. It chose its evidence. And the government chose, deliberately, to keep one critical witness off the stand: Ryan Choi, Citron Capital’s day-to-day operating principal and the central conduit through which Mr. Left contends he received the legal advice on which his good-faith defense depends.”

May 25 Mistrial Motion

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The mistrial motion continued:

“The government has repeatedly placed deletion before the jury—through Exhibit 102A, through a case agent, through an expert who disregarded a Court order, and through a question pressed after a sustained objection—knowing Mr. Left did not direct, request, or participate in any deletion by Mr. Choi. The cumulative impression of consciousness of guilt by deletion has become a thread woven through this trial, and it cannot be unwoven by a curative instruction four days later.”

The mistrial motion was later denied.

Following a recess, the trial continued. Adam Fee announced:

“The defense calls Andrew Left.”

Andrew got up, on his way to the podium blew his wife Steph a kiss, and took the stand.

Cautious investing to all.

This article is not investment advice and represents the opinions of its author, Edwin Dorsey. You can reach the author by email at edwin@585research.com or on Twitter @StockJabber. This article is for paid subscribers of The Bear Cave newsletter. If this article was forwarded to you, please consider becoming a paid subscriber to receive articles like this twice every month. Learn more here.

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