• 22 June, 2024
News

The SEC Charges 8 Social Media Influencers in a $100 Million Stock Manipulation Scheme

Federal prosecutors and the Securities and Exchange Commission charged seven social media influencers on Wednesday with committing securities fraud through Twitter and Discord, netting them more than $100 million in illegal gains.

Both the criminal and civil complaints, filed in the United States District Court for the Southern District of Texas, accused these influencers of encouraging their followers online to buy stocks they had purchased without disclosing their intention to dump them after share prices or trading volumes rose.

The social media usernames of the influencers listed in the press release include @PJ_Matlock, @MrZackMorris, @ohheytommy, @notoriousalerts, @Hugh_Henne, @LadeBackk, @Ultra_Calls, and @DipDeity.

The SEC charged the eighth influencer, Daniel Knight (@DipDeity), with aiding and abetting and the DOJ with conspiracy in the alleged scheme, in part because he co-hosted a podcast that promoted some of the primary defendants as expert traders. Authorities claimed that Knight traded with the other defendants and profited from the scheme.

As our complaint states, the defendants used social media to amass a large following of novice investors and then took advantage of their followers by repeatedly feeding them a steady diet of misinformation, which resulted in fraudulent profits of approximately $100 million,

said Joseph Sansone, Chief of the SEC Enforcement Division’s Market Abuse Unit.

Today’s action exposes the true motivation of these alleged fraudsters and serves as another warning that investors should be wary of unsolicited advice they encounter online, Sansone added.

According to the announcement, seven of the defendants have billed themselves as successful traders to their hundreds of thousands of social media followers since at least January 2020, but when the prices of the securities they promoted rose, those individuals would sell their positions.

According to the SEC, the defendants deleted old posts on Twitter and Discord to conceal the scheme and publicly stated that they were not dumping their stock. A recorded voice chat on Discord between two defendants discussing the scheme related to their manipulation of GTT Communications Inc. securities while observing its stock price rise in real-time in March 2021 was also detailed in the complaint.

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