- U.S. says tweets tanked stocks, allowing con-man to profit
- Scam blamed for more than $1.6 million in shareholder losses
A Scottish man who allegedly set up a Twitter account with a handle resembling Muddy Waters Research was charged by the U.S. with stock manipulation for posting a rumor of a fraud probe that halted trading in Audience Inc.
Prosecutors said James Alan Craig, of Dunragit, Scotland, bought 400 shares of the Mountain View, California-based sound technology company in January 2013 after posting fake tweets and later sold them at a profit as part of a scheme that caused more than $1.6 million in losses for shareholders.
Craig, 62, similarly scammed the market the same month by pretending to send messages on behalf of Citron Research that sent Sarepta Therapeutics Inc.’s stock tumbling, before reaping a profit on 700 shares of the pharmaceutical firm that he bought with his girlfriend’s TradeMonster account, according to a statement issued Thursday by the U.S.
“The allegations in this indictment describe a significant stock price manipulation committed through the use of social media,” Brian Stretch, the acting U.S. Attorney for San Francisco, said in the statement. “This prosecution makes clear that we will find and prosecute those who commit fraud on our stock exchanges, by any means, no matter where they reside.”
Craig was charged with one count of securities fraud, which carries a maximum prison sentence of 25 years. He was also sued by the U.S. Securities and Exchange Commission.
The criminal case is U.S. v. Craig, 15-cr-00517, U.S. District Court, Northern District of California (San Francisco). The civil case is SEC v. Craig, 15-cv-05076, U.S. District Court, Northern District of California (San Francisco).