US SEC Charges Eight Social Media Influencers with $100 Million Fraud

The US Securities and Exchange Commission (SEC) yesterday announced charges against eight individuals with defrauding around $100 million by manipulating exchange-traded stocks on the social media platforms Twitter and Discord.

According to Joseph Sansone, Chief of the SEC Enforcement Division's Market Abuse Unit, the defendants used social media to amass a large following of novice investors and then took advantage of their followers by repeatedly feeding them a steady diet of misinformation, which resulted in fraudulent profits of approximately $100 million.

The seven defendants charged with securities fraud are Perry Matlock, Edward Constantin, Thomas Cooperman, Gary Deel, Mitchell Hennessey, Stefan Hrvatin, John Rybarczyk.

Specifically, SEC's complaint alleges that, the seven individuals 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. However, 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.

Additionally, the complaint charges Daniel Knight (Twitter Handle @DipDeity) 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.

The SEC seeks permanent injunctions, disgorgement, prejudgment interest, and civil penalties against the eight defendants, and a penny stock bar against Hrvatin as well.