The Securities and Exchange Commission has charged eight people with a $100 million securities fraud conspiracy in which they manipulated exchange-traded equities using the social media sites Twitter and Discord.
Seven defendants advertised themselves as accomplished traders and amassed hundreds of thousands of followers on Twitter and in stock trading chatrooms on Discord, according to the SEC, starting at least in January 2020.
These seven defendants are accused of buying particular stocks and encouraging their sizable social media following to purchase those chosen stocks by publishing price objectives or making it known that they were purchasing, keeping onto, or increasing their stock positions.
But the complaint claims that as share prices and trading volumes increased in the securities they were promoting, the people repeatedly sold their shares without ever disclosing their intentions to do so.
Joseph Sansone, Chief of the SEC Enforcement Division’s Market Abuse Unit, said that the defendants used social media to build up a sizable following of inexperienced investors.
They then took advantage of their followers by continuously feeding them false information, which led to fraudulent profits of about $100 million.
“Today’s action reveals the true intent of these alleged fraudsters and is yet another reminder to investors to be wary of unsolicited advice they encounter online,” said the statement.
The following seven individuals were charged with securities fraud:
Name State of Residence Twitter Handle
Perry Matlock Texas @PJ_Matlock
Edward Constantin Texas @MrZackMorris
Thomas Cooperman California @ohheytommy
Gary Deel California @notoriousalerts
Mitchell Hennessey New Jersey @Hugh_Henne
Stefan Hrvatin Florida @LadeBackk
John Rybarcyzk Texas @Ultra_Calls
The complaint also accuses Texas resident Daniel Knight (@DipDeity on Twitter) of aiding and abetting the purported conspiracy by, among other things, co-hosting a podcast in which he touted several of the other people as experienced traders and gave them a platform for their deceptive claims. Knight traded cooperatively with the other defendants and frequently profited from the manipulation.
The American lawsuit by the SEC The Southern District of Texas District Court requests civil penalties, disgorgement, prejudgment interest, and permanent injunctions against each defendant in addition to a penny stock ban for Hrvatin. Criminal charges against all eight individuals also were filed in a parallel action brought by the Department of Justice’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Texas.