Social media sites like Twitter and Discord were used in this plan by the defendants.
The SEC has filed a complaint against all of the defendants in the case.
The SEC has now stated that it would be pursuing charges against eight social media influencers in connection with a $100 million securities fraud scheme. Social media sites like Twitter and Discord were used in this plan by the defendants to affect publicly listed stock prices.
Furthermore, the SEC has filed a complaint against all of the defendants in the case with the United States District Court for the Southern District of Texas.
The SEC is seeking permanent injunctions, disgorgement, prejudgment interest, and civil penalties.
According to SEC Enforcement Division Chief Joseph Sansone:
“As our complaint states, 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.”
The SEC singles out “@LadeBackk,” aka Stefan Hrvatin, since he will not only be facing the aforementioned charges but also be forbidden from trading penny stocks in the market.
Stock Price Manipulation
Moreover, the SEC claims that beginning in early 2020, seven of the eight defendants promoted themselves as successful traders on social media platforms like Twitter and in online stock trading communities like Discord, amassing thousands of followers.
Each of the seven defendants is accused of purchasing stocks and then encouraging their large social media following to do the same by announcing price targets or otherwise making it public that they were holding or increasing their stakes in the companies in question.
However, the lawsuit says that the people routinely sold their shares without declaring their plans to do so when the share prices and/or trading volumes climbed in the securities they were pushing.