The Securities and Exchange Commission continues its prosecution of social media stock fraud.
Yesterday, the SEC filed fraud charges against a trader who allegedly utilized social media to spread false and misleading information about a defunct company, while secretly dumping his holdings and profiting in the process. Per the SEC Complaint, Andrew Fassari used a Twitter handle to tweet fraudulent statements about Arcis Resources Corporation, a non-operating company with publicly traded shares. In particular, the SEC alleges that Fassari commenced the purchase of around 41 million ARCS shares shortly before making false representations about ARCS to his multitude of Twitter followers. Fassari then sent out over 100 tweets concerning ARCS, scores of which were fraudulent and, over the next few days, ARCS’s stock price spiked, increasing over 4,000%, the SEC contends. The SEC also alleged that Fassari made material misrepresentations regarding his own trading in ARCS shares, namely that he sold his entire position reaping over $900,000, while continuing to falsely tout ARCS and his purported trading in it.
Melissa R. Hodgman, Acting Director of the SEC’s Division of Enforcement commented on the case: “The SEC is committed to protecting investors by proactively monitoring suspicious trading activity tied to social media, and by charging those who use social media to violate the federal securities laws.”
Given the recent controversies surrounding trading in GameStop and AMC, there is no doubt the SEC is feeling immense political pressure to ramp up its investigations and prosecutions of social media fueled stock manipulation. In a multi-pronged assault, the SEC is: (1) targeting individuals on social media platforms engaged in fraudulent trading schemes, (2) issuing trading suspensions in manipulated stocks, and (3) educating the investing public through alerts issued by its Office of Investor Education and Advocacy. We will no doubt see more of this aggressive enforcement by the SEC in the near future, and perhaps rule-making to address the broader concerns implicated in the recent trading scandals.
Social Media Stock Fraud Attorney David Chase
David Chase, Esq. is an SEC defense lawyer, former Senior Counsel with the SEC’s Division of Enforcement and an Adjunct Professor of Law at the University of Miami School of Law where he teaches SEC Regulation. His SEC defense law firm, based in South Florida, represents nationwide those under SEC investigation and prosecution. Mr. Chase may be contacted toll-free at: 800-760-0912, or email at david@davidchaselaw.com. Firm website: securitiesfrauddefense.net.
