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SEC charges social media influencers in $100M stock fraud

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WASHINGTON (AP) — U.S. government regulators charged eight social media influencers Wednesday in a $100 million fraud scheme in which they’re accused of promoting exchange-traded stocks, then selling their shares when prices rose.

The Securities and Exchange Commission said that since at least early 2020, seven of the influencers promoted themselves as successful traders on Twitter and in Discord chat rooms and encouraged hundreds of thousands of their followers to buy certain stocks. When prices or volumes of the promoted stocks would rise, the influencers “regularly sold their shares without ever having disclosed their plans to dump the securities while they were promoting them,” the SEC said Wednesday.

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“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 SEC’s Joseph Sansone, chief of the SEC Enforcement Division’s Market Abuse Unit.

Named in the SEC’s complaint were Perry Matlock (â†*PJ–Matlock), John Rybarcyzk (â†*Ultra–Calls) and Edward Constantin (â†*MrZackMorris) of Texas; Thomas Cooperman (â†*ohheytommy) and Gary Deel (â†*notoriousalerts) of California; Mitchell Hennessey (â†*Hugh–Henne) of New Jersey; and Stefan Hrvatin (â†*LadeBackk) of Florida.

An eighth person, Daniel Knight (â†*DipDeity) of Texas, co-hosted a podcast promoting the defendants as experts and traded in concert with them.

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The SEC is increasingly cracking down on social media influencers and celebrities who promote financial products, including cryptocurrency.

In October, the SEC barred Kim Kardashian from promoting cryptocurrencies for three years and fined her $1 million to settle federal charges that she recommended a crypto security to her 330 million Instagram followers without making clear that she was paid to do so.

In 2020, actor Steven Seagal agreed to pay more than $300,000 as part of a similar settlement with the SEC, which also banned him from promoting investments for three years.

In 2018, the SEC settled charges against professional boxer Floyd Mayweather Jr. and music producer DJ Khaled for failing to disclose payments they received for promoting investments in a digital currency.

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