Topline
The U.S. Securities and Exchange Commission charged eight social media influencers after they allegedly used their platforms to manipulate stocks, according to a complaint filed Wednesday, in an alleged pump-and-dump scheme that amassed an estimated $100 million since January 2020.
Eight social media influencers allegedly manipulated stocks by promoting them to their followers.
Key Facts
The complaint, filed in the U.S District Court for the Southern District of Texas, charges Edward Constantin, Perry Matlock, Thomas Cooperman, Gary Deel, Mitchell Hennessey, Stefan Hrvatin and John Rybarcyzk with securities fraud and Daniel Knight with aiding and abetting.
The SEC alleges the eight worked together to identify a stock to manipulate before promoting it, leading to increased demand and an inflated share price, and then later selling their shares into the demand generated by their recommendations.
The eight would allegedly promote each other on their different platforms—including Hrvatin, who primarily used Twitter—in their promotion of a stock.
Constantin and Matlock, who co-founded the “Atlas Trading” stock-trading forum on Discord, complemented a similar forum “Sapphire Trading” founded by Rybarcyzk, both of which were promoted by a YouTube channel hosted by Cooperman and Deel in addition to a podcast hosted by Hennessey and Knight.
The filing lists shares for Camber Energy, Alzamend Neuro, Vislink Technologies, Torchlight Energy Resources and ABVC Biopharma as being manipulated by the eight.
Crucial Quote
“To their legions of followers on social media, the eight defendants have, for years, promoted themselves as trustworthy stock-picking gurus,” the complaint reads. “In reality, they are seasoned stock manipulators.”
Big Number
1.6 million. That’s how many combined Twitter followers seven of the eight accused have as of December 14. This does not include followers for Matlock’s account, which has since been deleted.
Key Background
Prominent social media users have become finance influencers in recent years, including a spike in content creators on TikTok promoting investment techniques. Platforms like Reddit or Discord have developed categories for their users to find communities—like the ones previously hosted by Constantin, Matlock and Rybarcyzk—associated with personal finance and stock trading. Twitter has continually influenced share prices and notably affected the rise of the cryptocurrency Dogecoin, which recorded an all-time high of $0.70 after it was promoted by Elon Musk and other users.
Further Reading
How Much Do TikTok Influencers Make Teaching Gen Z How To Invest? (Forbes)
U.S. Authorities Charge 8 Social Media Influencers In Securities Fraud Scheme (Reuters)
Source: https://www.forbes.com/sites/tylerroush/2022/12/14/eight-social-media-influencers-lied-to-their-followers-to-manipulate-stocks-sec-lawsuit-claims/