With a pair of phony Twitter accounts and fewer than two dozen followers, the U.S. Department of Justice says a Scottish man allegedly manipulated stocks and then capitalized on the downward stock prices.
A federal grand jury in San Francisco indicted the alleged cunning Twitter user, James Alan Craig, 62, for securities fraud, according to a complaint filed Thursday.
In January 2013, Craig allegedly created Twitter accounts with handles and user names similar to market research firms Muddy Waters Research and Citron Research, pumping out fake tweets that claimed two businesses — Audience, Inc. and Sarepta Therapeutics, Inc. — were being investigated by government agencies.
The eight fake Muddy Waters tweets falsely stated that the Audience, a Bay Area sound technology company, was under investigation by the Department of Justice. As a result, Audience’s share price fell sharply by 28 percent “prompting the Nasdaq exchange to temporarily halt trading of Audience stock.”
“AUDIENCE the noise suppression company being investigated by DOJ on rumoured [sic] fraud charges Full reort [sic] to follow,” Craig allegedly tweeted.
Then the next day, false Citron Research tweets said “the Food and Drug Administration had seized the [Sarepta’s] drug trial papers and certain trial results were tainted,” which was untrue, according to the complaint. “The company’s share price dropped to a low 16 percent below where it had traded just before the false tweets.”
“$SRPT FDA steps in as its 48 weeks results on Etelplisen [sic] results are tainted and have been doctored they believe Trial papers seized by FDA,” he allegedly tweeted.
Craig then allegedly bought Audience and Sarepta shares, but waited too long to trade them and profited only about $100, the complaint said.
“Craig’s trading in connection with these two market manipulations demonstrates that he attempted to manipulate the equity price of these two issuers by issuing fraudulent tweets about the companies so that he could profit personally,” the complaint said.
Craig faces up to 24 years in prison and a fine of $250,000 alongside restitution if convicted, according to a Department of Justice statement.
“This investigation dismantled a stock market manipulation scheme that operated with one goal in mind — to falsely defame a company in order to destroy its stock value for financial gain,” Special Agent in Charge David J. Johnson said in the statement.
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