SEC charges social media influencers in alleged $100 million fraud scheme
The seal of the US Securities and Exchange Commission (SEC) is seen at their headquarters in Washington, DC on May 12, 2021.
Andrew Kelly | Reuters
The Securities and Exchange Commission has charged seven social media influencers with using Twitter and Discord to commit securities fraud and an additional influencer who supported the alleged $100 million scheme, the agency announced Wednesday.
The seven charged with securities fraud used social media platforms to manipulate publicly traded stocks in a scheme dating back to at least January 2020, the SEC alleged. Through widely followed Twitter accounts and stock trading chat rooms on Discord, the defendants allegedly “promoted themselves as successful traders,” according to an SEC press release, and allegedly encouraged followers to buy stocks they also bought.
But they did not disclose to their followers while promoting those stocks that they allegedly planned to sell shares later once prices or trading volumes rose, according to the complaint. The influencers allegedly made a profit by pumping up the stock prices and then selling them once they rose, making about $100 million in total, the SEC alleges.
The eight also face criminal charges from the Justice Department’s Fraud Division and the US Attorney’s Office for the Southern District of Texas.
Each of the defendants had more than 100,000 Twitter followers this month, the complaint states. One of those accounts, @PJ_Matlock, run by Texas resident Perry Matlock who calls himself the CEO of Atlas Trading, no longer exists as of Wednesday. The other primary defendants accused of securities fraud (and their Twitter handles) are Edward Constantin (@MrZackMorris), Thomas Cooperman (@ohheytommy), Gary Deel (@notoriousalerts), Mitchell Hennessey (@Hugh_Henne), Stefan Hrvatin (@ LadeBackk) and John Rybarcyzk (@Ultra_Calls).
Daniel Knight (@DipDeity) was charged with aiding the alleged scheme, in part by co-hosting a podcast that promoted some of the primary defendants as expert traders. The SEC alleged Knight also traded with the other defendants and profited from the scheme.
Some of the defendants’ Twitter bios contain disclaimers, at least as of Wednesday, that appear to try to mitigate their legal risks. For example, Constantin’s account says “All my tweets are just my opinions. I’m still not a financial advisor. Parody account.” Hennessey’s says: “Everything is my opinion. I actively trade positions. Not a pro, not financial advice, probably doing the opposite.” Rybarcyzk’s read “DISCLAIMER: My tweets are NOT recommendations to enter a stock. – Ideas shared on Twitter are NOT buy or sell signals. DO NOT TRADE BASED ON SOCIAL MEDIA.”
Knight’s bio says, “don’t EVER buy/sell my tweets.”
Twitter and Discord did not immediately respond to requests for comment. Three of the influencers charged in the scheme who had open direct messages on Twitter, Deel, Rybarcyzk and Knight, did not immediately respond to CNBC’s requests for comment. Matlock, who has deleted his Twitter account, did not immediately respond to a request for comment sent to his Instagram account. Contact information for the other four defendants could not immediately be found.
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