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Social Media Influencers Charged in Pump-and-Dump Scheme

S.J. Steinhardt
Published Date:
Dec 14, 2022


Eight men have been charged by the Securities and Exchange Commission (SEC) with engaging in an alleged $100 million stock manipulation scheme run through social media platforms Twitter and Discord. The SEC filed the complaint on Dec. 13 in U.S. District Court for the Southern District of Texas. "To their legions of followers on social media, the eight defendants have, for years, promoted themselves as trustworthy stock-picking gurus. In reality, they are seasoned stock manipulators," the complaint states.

“Seven of the defendants promoted themselves as successful traders and cultivated hundreds of thousands of followers on Twitter and in stock trading chatrooms on Discord,” the SEC said. They bought stocks and promoted them to their thousands of followers, only to sell them, without telling their followers, when the share prices and/or trading volumes rose.

Such a scheme meets the SEC’s definition of Pump and Dump, in which “fraudsters typically spread false or misleading information to create a buying frenzy that will “pump” up the price of a stock and then “dump” shares of the stock by selling their own shares at the inflated price. Once the fraudsters dump their shares and stop hyping the stock, the stock price typically falls and investors lose money.” 

The eighth person charged used his podcast as a forum for the others to promote themselves as expert traders. The podcaster also “traded in concert with the other defendants and regularly generated profits from the manipulation,” according to the SEC.

In addition to the civil charges brought by the SEC, the defendants are facing criminal charges. A federal grand jury in the Southern District of Texas returned an indictment that charged the eight men with conspiracy to commit securities fraud, the U.S. Department of Justice (DOJ) announced. The indictment was unsealed on Dec. 13. “From in or around January 2020 to in or around April 2022, the defendants profited at least approximately $114 million from their scheme,” the DOJ announcement read.