The tartan trader charged with fraud
06 November 2015 California
Image: Shutterstock
A Scottish short seller is facing charges of profiting from stock manipulation by using social media to spread false information on two companies.
The Securities and Exchange Commission (SEC) filed securities fraud charges against James Alan Craig, accusing him of using hoax Twitter accounts to deceive investors in Audience and Sarepta Therapeutics.
Craig published a series of tweets over two days causing sharp drops in stock prices and trading in Audience stocks to be temporarily halted.
The SEC claims: “On each occasion, Craig bought and sold shares of the target companies in a largely unsuccessful effort to profit from the sharp price swings.”
The two Twitter accounts were made to look like the official accounts of well-known securities research firms Muddy Waters and Citron Research by using the their logos and similar handles, according to the SEC.
The SEC’s complaint was filed in federal court in California.
The US Attorney’s Office for the Northern District of California also filed criminal charges against Craig.
The SEC’s charges date back to January 2013 where Craig allegedly falsely claimed Audience was under investigation.
Audience’s share price plunged 28 percent after the first tweet and trading on Nasdaq was halted.
The next day, Craig’s tweets about Sarepta Therapeutics, issued using look-alike account similar to that of Citron Research, caused a 16 percent drop in its share price.
Both companies’ stock prices recovered once the fraud was revealed.
Craig was also accused of using aliases to tweet that it would be difficult for the SEC to determine who sent the tweets because real names weren’t used.
Jina Choi, director of the SEC’s San Francisco regional office, said: “As alleged in our complaint, Craig’s fraudulent tweets disrupted the markets for two public companies and caused significant financial losses for their investors.”
“Craig also said in later tweets that the SEC would have a hard time catching the perpetrator. As today’s enforcement action demonstrates, those tweets turned out to be false as well.”
The SEC’s complaint relates to securities fraud in violation of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. The SEC is aiming for a permanent injunction against future violations, disgorgement, and a monetary penalty from Craig.
The SEC has also issued an investor alert, prepared by the Office of Investor Education and Advocacy, warning investors about fraudsters looking to manipulate share prices through social media by spreading false or misleading information about stocks, and provides tips for checking for red flags of investment fraud.
The Securities and Exchange Commission (SEC) filed securities fraud charges against James Alan Craig, accusing him of using hoax Twitter accounts to deceive investors in Audience and Sarepta Therapeutics.
Craig published a series of tweets over two days causing sharp drops in stock prices and trading in Audience stocks to be temporarily halted.
The SEC claims: “On each occasion, Craig bought and sold shares of the target companies in a largely unsuccessful effort to profit from the sharp price swings.”
The two Twitter accounts were made to look like the official accounts of well-known securities research firms Muddy Waters and Citron Research by using the their logos and similar handles, according to the SEC.
The SEC’s complaint was filed in federal court in California.
The US Attorney’s Office for the Northern District of California also filed criminal charges against Craig.
The SEC’s charges date back to January 2013 where Craig allegedly falsely claimed Audience was under investigation.
Audience’s share price plunged 28 percent after the first tweet and trading on Nasdaq was halted.
The next day, Craig’s tweets about Sarepta Therapeutics, issued using look-alike account similar to that of Citron Research, caused a 16 percent drop in its share price.
Both companies’ stock prices recovered once the fraud was revealed.
Craig was also accused of using aliases to tweet that it would be difficult for the SEC to determine who sent the tweets because real names weren’t used.
Jina Choi, director of the SEC’s San Francisco regional office, said: “As alleged in our complaint, Craig’s fraudulent tweets disrupted the markets for two public companies and caused significant financial losses for their investors.”
“Craig also said in later tweets that the SEC would have a hard time catching the perpetrator. As today’s enforcement action demonstrates, those tweets turned out to be false as well.”
The SEC’s complaint relates to securities fraud in violation of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. The SEC is aiming for a permanent injunction against future violations, disgorgement, and a monetary penalty from Craig.
The SEC has also issued an investor alert, prepared by the Office of Investor Education and Advocacy, warning investors about fraudsters looking to manipulate share prices through social media by spreading false or misleading information about stocks, and provides tips for checking for red flags of investment fraud.
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