SEC Charges Trader with Stock Manipulation Over False Tweets

James Alan Craig causes a crash in the stock prices of two US-listed companies but failed to benefit from it

The Securities and Exchange Commission has filed a complaint against a Scottish trader who repeatedly tweeted false information about two companies in order to manipulate their stock price and benefit from it. Scotsman James Alan Craig faces criminal charges from the Attorney’s Office for the Northern District of California following the market regulator’s complaint.

Impersonating Research Firms

According to a SEC statement, the Scottish trader created two Twitter accounts using aliases, making  them look like the accounts of reputable securities research companies. From these accounts he repeatedly posted tweets with false information about two public companies – Audience Inc., a mobile voice and audio processing firm, and Sarepta Therapeutics, a medical research and drug development company.

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One company ended up with its shares suspended

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In the case of Audience, Craig created an account that mimicked the logo of research firm Muddy Waters, from whose name he tweeted false information, causing the stock of Audience to plummet 28 percent, before Nasdaq suspended trade in the shares only after the fraud was revealed.

In the case of Sarepta, Craig impersonated Citron Research and tweeted that the pharmaceuticals developer was under investigation. The stock of the company dropped by 16 percent as a result of the scam.

An Overconfident Perpetrator

All this happened over two days, January 29 and 30, 2013, with Craig buying and selling shares in the two companies with a view to benefiting from the price fluctuations. According to SEC, this attempt was largely unsuccessful.

Commenting on the results from the investigation conducted by SEC, the commission’s Director of the San Francisco Regional Office, Jina L Choi, 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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