SEC Files Fraud Charges on False Tweets

The U.S. Securities and Exchange Commission (SEC) filed securities fraud charges against a Scottish trader whose false tweets incited sharp drops in the stock prices of two companies and triggered a trading halt in one of them.

The complaint was filed in a Northern District federal court in California alleging that James Alan Craig of Dunragit, Scotland, tweeted multiple false statements about the two companies on Twitter accounts that he deceptively created to look like the real Twitter accounts of well-known securities research firms.

In the complaint, the SEC alleges that Craig’s first false tweets caused one company’s share price to fall 28% before Nasdaq temporarily halted trading. The next day, Craig’s false tweets about a different company caused a 16% decline in that company’s share price. 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 investigation also determined that Craig later used aliases to tweet that it would be difficult for the SEC to determine who sent the false tweets because real names weren’t used.

Separately, the U.S. Attorney’s Office for the Northern District of California Friday filed criminal charges against Craig.

Jina L. 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.

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