SEC Charges 8 in $100M 'FinTwit' Stock Scheme
The Securities and Exchange Commission Wednesday charged eight individuals in a $100 million securities fraud scheme in which they used the social media platforms Twitter and Discord to manipulate exchange-traded stocks.
“To their legions of followers on social media, the eight defendants have, for years, promoted themselves as trustworthy stock-picking gurus. In reality, they are seasoned stock manipulators,” the SEC complaint states. “They identify stocks ripe for manipulation, acquire substantial positions in these securities, and then recommend those stocks as good investments to their followers on Twitter, in online stock-trading forums they run, and on podcasts.”
The complaint continues: “They encourage their followers to purchase the selected stocks, often claiming that they likewise have bought or intend to buy these stocks for themselves and hold them. Instead, the defendants sell their shares into the demand that their deceptive promotions generate.”
According to the SEC, since at least January 2020, seven of the defendants promoted themselves as successful traders and cultivated hundreds of thousands of followers on Twitter and in stock trading chatrooms on Discord.
Seven individuals were charged with securities fraud:
“These seven defendants allegedly purchased certain stocks and then encouraged their substantial social media following to buy those selected stocks by posting price targets or indicating they were buying, holding, or adding to their stock positions,” the SEC said.
However, as the complaint alleges, “when share prices and/or trading volumes rose in the promoted securities, the individuals regularly sold their shares without ever having disclosed their plans to dump the securities while they were promoting them,” the complaint states.
The complaint further charges Daniel Knight (@DipDeity), of Texas, with aiding and abetting the alleged scheme by, among other things, co-hosting a podcast in which he promoted many of the other individuals as expert traders and provided them with a forum for their manipulative statements. Knight also traded in concert with the other defendants and regularly generated profits from the manipulation, according to the SEC.
Influence and Manipulation
From at least January 2020 through present, the eight defendants earned approximately $100 million from this stock-manipulation scheme, the SEC said.
Each of the defendants amassed substantial numbers of followers on Twitter, where they regularly post about stocks they are manipulating, the complaint states.
