The Securities and Exchange Commission on Tuesday charged a penny stock trader in Santa Cruz, California, with conducting a fraudulent pump-and-dump scheme in the stock of a biotech company, which included making a false assertion that the company had developed an “approved” COVID-19 blood test.
According to the SEC’s complaint, beginning around March 2, Jason Nielsen attempted to drive the stock price of Arrayit Corp. securities higher using online posts encouraging investors to purchase shares, including numerous messages repeating the false assertion regarding an approved COVID-19 test, without telling them about his large position in Arrayit stock or his plans to sell the shares while others were buying.
In March and April 2020, the complaint states, “the news cycle in America was saturated with reports and commentary on the severity of the COVID-19 virus, the need for accurate and rapid COVID-19 tests, the need for increased COVID-19 testing, and the downturn in the stock market and global economy due to the COVID-19 pandemic.”
During this time, Nielsen “posted numerous messages on Investors Hub that promoted Arrayit stock claiming that Arrayit had a COVID-19 test; that Arrayit’s COVID-19 test was pending Emergency Use Authorization from the FDA; and that Arrayit had received approval for its COVID-19 test,” the complaint states.
Nielsen also allegedly created the false impression of high demand for Arrayit stock by placing and subsequently canceling several large orders to purchase shares in a tactic known as “spoofing,” the SEC said.