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November 06, 2015 at 04:13 AM
The Securities and Exchange Commission charged a Scottish trader Thursday with securities fraud for sending false tweets that caused sharp drops in the stock prices of two companies and halted trading in another.
The agency’s Office of Investor Education and Advocacy also released Thursday an investor alert about fraudsters who may attempt to manipulate share prices by using social media to spread false or misleading information about stocks.
Filed in federal court in the Northern District of California, the SEC complaint states that James Alan Craig of Dunragit, Scotland, tweeted “multiple false statements” about the two companies on Twitter accounts that he deceptively created to look like the real Twitter accounts of well-known securities research firms.
The U.S. Attorney’s Office for the Northern District of California filed criminal charges the same day against Craig.
Jina Choi, director of the SEC’s San Francisco Regional Office, said in a statement that Craig’s fraudulent tweets “disrupted the markets for two public companies and caused significant financial losses for their investors.” Craig “also said in later tweets that the SEC would have a hard time catching the perpetrator. As today’s enforcement action demonstrates, those tweets turned out to be false as well.”
The SEC’s complaint alleges that Craig’s first false tweets caused one company’s share price to fall 28% before Nasdaq temporarily halted trading. The next day, Craig’s false tweets about a different company caused a 16% decline in that company’s share price. On each occasion, Craig bought and sold shares of the target companies in a largely unsuccessful effort to profit from the sharp price swings.
