Facing federal securities fraud charges, short seller Andrew Left has petitioned the Securities and Exchange Commission to define illegal trading, played in a golf tournament with President Trump in Florida, and asked the Department of Justice to dismiss the case against him. So far, nothing has stopped the wheels of justice from grinding towards a trial next spring.

But could a new gambit be more fruitful?

At the end of October, Left, the founder of Citron Capital, filed a defamation lawsuit in a California federal court against hedge fund Anson Funds Management and two of its executives, co-founder Moez Kassam and Sunny Purl. In it, Left claimed they lied to the court about a payment arrangement that is key to the government’s criminal case against the short seller.  

“The evidence clearly demonstrates that it was defendants who devised the scheme,” his attorneys said in the lawsuit, which was heavily redacted.

Left told Institutional Investor that the facts to prove his allegation can be found in sworn testimony to the government that is currently redacted. “It’s not ‘he said, she said.’ It’s not gray. It’s a black and white issue,” he explained. Left added that Anson had a motive to create the payment scheme while he did not.

Both Kassam and Purl denied lying to the authorities. In a statement to II, a spokeswoman for Anson said the pair “testified truthfully under oath” and called Left’s accusations “the desperate actions of a desperate man.” She also said that Anson planned to file a motion to dismiss the lawsuit.

Anson was one of several hedge funds investigated by the government over short selling activities in recent years. According to Left’s new lawsuit, that probe started in 2018 though it did not come to light until 2021.

As part of that probe, in 2024 Anson reached a $2.25 million settlement with the SEC over the firm’s alleged failure to tell its investors about its financial arrangement with Left. Anson neither admitted nor denied the allegations.

The two had teamed up to short Namaste, which later collapsed. Left wrote and published the research, Anson placed the trades and then paid Left through a third-party intermediary, Kurt Feshbach’s Falcon Research, in what prosecutors called a false invoicing scheme.

Feshbach was interviewed by the SEC during the investigation, and his comments are redacted in Left’s complaint. He declined to comment.

Both the SEC and the DOJ have claimed that the scheme played a major role in their decisions to charge Left, according to the short seller’s new lawsuit.

In its 2024 indictment of Left on criminal securities fraud, the DOJ devoted nearly two pages to the topic of the false invoices and the payments from Anson. According to Left’s lawsuit against Anson, “each invoice was considered evidence of consciousness of guilt that Left directed Anson to send Left his share of trading profits through a third-party intermediary to conceal the true beneficiary and purpose of the payments.” The indictment also claimed that Left lied to federal agents when he told them that there was no “compensation” between himself and the hedge fund.

The SEC, in its settlement with Anson, said that [Left] asked Anson to “send him his share of trading profits through a third-party intermediary, to which [Anson] agreed.”

But Left denied that he lied and said there is no evidence of any false statements made about any of the stocks he shorted. He argued that is why the government is focusing on the invoice issue, which came up several times in Left’s recent effort to get the case dismissed.

Left also said the third-party arrangement was Anson’s idea and that he “did not care how Anson paid him.” He also pointed out that it was Anson, not him, that had a motive to hide the financing arrangement. The hedge fund’s motive, he argued was “to conceal [its] conflicts of interest.”

According to the heavily redacted part of the complaint, Anson was participating in a bought-deal offering for Namaste in which Anson would take a long position in the stock. After the short report surfaced, Anson was able to negotiate a discounted price on the financing deal, the complaint said.

“They did not want to make it appear that they paid a short seller to drive the price down so that the financing would be more favorable for them while they profited off the price dip on a short position,” Left argued.

(Anson in 2023 reached a settlement deal with the SEC, paying $3.33 million in disgorgement and penalties for buying stock after shorting it, which is illegal)

By providing evidence against Left, Anson was able to “escape the wrath of the SEC (and DOJ) with just a slap on the wrist,” Left’s lawyers wrote in the complaint.