By Investing.com Staff
The U.S. Securities and Exchange Commission announced Wednesday that it has charged eight social media influencers in a securities fraud scheme.
The SEC said the individuals were part of a $100 million scheme that used social media platforms such as Twitter and Discord to manipulate the price of exchange-traded stocks.
According to the Commission, since at least January 2020, seven of the defendants promoted themselves as successful traders and gained hundreds of thousands of followers on Twitter and in stock trading chatrooms on Discord.
They are said to have bought shares of certain stocks and then urged their hundreds of thousands of social media followers to buy the stocks, posting price targets or indicating they were buying, holding, or adding to their positions.
However, when the stock price and/or trading volumes rose, the individuals are said to have sold their shares without ever disclosing their plans to dump the shares when promoting them.
"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," said the Chief of the SEC Enforcement Division's Market Abuse Unit, Joseph Sansone.
"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 social media influencers named by the SEC include "PJ Matlock," whose real name is Perry Matlock, Daniel Knight, who goes by the online handle "Dip Deity," and Edward Constantin, who went by the online name of "Zack Morris." Others charged include Thomas Cooperman, Gary Deel, Mitchell Hennessey, Stefan Hrvatin, and John Rybarczyk.
The SEC said Knight has been further charged with aiding and abetting the alleged scheme by co-hosting a podcast in which he promoted many of the other defendants.