(Bloomberg) -- The US is seeking court permission to set up a website to allow potentially thousands of victims of short seller Andrew Left’s alleged fraud to come forward, saying there are too many to reach out to directly.
The website would include an e-mail address and telephone number for a victim-assistance hot-line similar to those used in Bernard Madoff’s fraud case and former Ontrak Inc. CEO Terren Peizer’s insider-trading case, the US Justice Department said in a filing Tuesday in federal court in Los Angeles.
Left, once one of the most active short sellers on Wall Street, is accused of using false and misleading statements about his trading intentions in more than a dozen companies to try to move their stock and make a quick profit. He was charged with securities fraud in July following a wide-ranging probe into the industry.
Potential victims include anyone who read or heard Left’s commentary “through his website, his Twitter account, and over the airwaves,” prosecutors said in the filing. His trading also may have harmed “thousands of counterparties and other market participants — all potential crime victims — who traded in the targeted securities during the relevant periods,” the US said.
Left pleaded not guilty and denies wrongdoing. His lawyer, James Spertus, doesn’t object to the creation of a website. But he said prosecutors’ failure to identify any victims so far “illustrates the problem the government will have in their case — there are no victims.” Spertus said Left helped his readers rather than hurt them.
People who read Left’s reports “profited from the information and are not victims,” Spertus said in an interview.
The government is required to notify potential victims of fraud, but it needs court permission to use a website instead of traditional outreach — such as phone calls — that prosecutors say is “impracticable.”
(Updates with comment from Andrew Left’s lawyer in fifth paragraph.)
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