The Securities and Exchange Commission (SEC) has filed fraud charges against eight influencers pertaining to a $100 million securities fraud plot. Simultaneously, criminal charges have been leveled at the individuals by the Department of Justice’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Texas.
According to a statement by the SEC, the defendants utilized Twitter and Discord in an effort to manipulate stocks. At least since January 2020, 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.
These seven defendants allegedly purchased certain stocks and then encouraged their followers to buy the selected stocks by posting price targets or indicating they were buying, holding, or adding to their stock positions.
The SEC’s complaint alleges that the defendants participated in a pump-and-dump scam selling shares when the prices rose in the targeted securities.
Joseph Sansone, Chief of the SEC Enforcement Division’s Market Abuse Unit, commented:
“As our complaint states, 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. Today’s action exposes the true motivation of these alleged fraudsters and serves as another warning that investors should be wary of unsolicited advice they encounter online.”
The following seven individuals were charged with securities fraud:
Name State of Residence Twitter Handle
Perry Matlock Texas @PJ_Matlock
Edward Constantin Texas @MrZackMorris
Thomas Cooperman California @ohheytommy
Gary Deel California @notoriousalerts
Mitchell Hennessey New Jersey @Hugh_Henne
Stefan Hrvatin Florida @LadeBackk
John Rybarcyzk Texas @Ultra_Calls
The complaint further charges Daniel Knight – Twitter Handle @DipDeity, of Texas, 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.
The SEC’s complaint, filed in the U.S. District Court for the Southern District of Texas, seeks permanent injunctions, disgorgement, prejudgment interest, and civil penalties against each defendant, as well as a penny stock bar against Hrvatin.
The SEC’s investigation is ongoing.