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Screenshot of Citron Research's website

Citron Research is a research provider that publishes reports on publicly traded companies while simultaneously taking a corresponding short position in the stock.

According to its website, Citron's investigators have a track record in "identifying fraud and terminal business models."

Citron's reports are usually damning in tone, armed with a provocative headline and followed up with a targeted social-media push.

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A few recent examples:

Oct 21. Report: 'Valeant – Could this be the Pharmaceutical Enron?'

Tweet: $VRX game over....Citron publishes smoking gun

Aug. 31 Report: 'Wayfair is the Most Mispriced Stock Citron Research has seen in Years – Fair Value Under $10'

Tweet: Citron PROVES why Wayfair $W is worth less than $10 a share. This is a must read report. Wayfair admits their business model does not work

March 9 Report: 'AXDX Big Lie Exposed by SEC – $1.00 Target within 18 Months'

Tweet: SEC exposes $AXDX. No viable biz. Read – but dont finger trade

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"What they seem to do quite well is they're able to spin existing facts into a horrible scenario. It reads very badly," Peter Hodson, chief executive officer of 5i Research Inc., an independent research firm, said in an interview. "Their job as a company is to create the most amount of panic so they and their clients can make the most amount of money."

Mr. Hodson says he has, on occasion, taken the company's research into consideration while sizing up a stock. But he doesn't hold Citron's research in the same high regard as that put out by Muddy Waters LLC – another high-profile U.S.-based research shop/short-seller.

One thing Mr. Hodson takes issue with is that Citron, and others in the space, are allowed to release reports to clients before the general public, which he says makes for an unfair playing field.

"You don't know who got that report five days ago, or last week, or even in the last month," he said.

Los Angeles-based Citron Research was set up in 2001 by former commodities trader Andrew Left. In the late nineties, Mr. Left and others at trading firm Universal Commodity Corp. were sanctioned by the U.S. National Futures Association.

The regulator found that Mr. Left "made false and misleading statements to cheat, defraud or deceive a customer in violation of NFA compliance rules." Mr. Left was subsequently barred from acting as a principal in the industry for three years and ordered to take an ethics-training course.

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Mr. Left also disclosed on Citron's website that he was arrested in Florida in 2010 after a petty dispute with a dry cleaner. The charges, he says, were subsequently dropped.

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About the Author
Capital Markets Reporter

Niall McGee joined the Globe and Mail in 2014 as a capital markets reporter. Previously, he spent a decade at Business News Network (BNN) as a reporter and segment producer. In 2016, he won a National Newspaper Award (NNA) in business alongside veteran reporter Jacquie McNish for an investigative series into alleged insider trading at online gambling company Amaya Inc. More

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