Securities Fraud Charges Dropped Against Influencers Accused of Stock Manipulation

A federal judge has dismissed all charges against seven social-media influencers the SEC and Justice Department had accused of perpetrating a “stock manipulation scheme” on Twitter and Discord.

On Wednesday, March 20, U.S. District Judge Andrew S. Hanen of the District Court for the Southern District of Texas dismissed all charges against the defendants, ruling that the government failed to state an offense in a case alleging securities fraud. The government’s case hinged on a theory that the individuals had committed securities fraud because they posted on social media that they owned a stock and their reasons for purchasing the stock but did not also state when they intended to sell the stock. In his ruling, Hanen rejected the government’s argument that this constituted a crime and concluded that the defendants “did not deprive investors of their money or property through any misrepresentation.” A copy of the order is at this link.

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The influencers were charged by the SEC and Justice Department in December 2022 for allegedly encouraging their “substantial social media following[s]” to buy stocks by posting price targets or indicating they were buying, holding or adding to their stock positions but “regularly sold their shares without ever having disclosed their plans to dump the securities while they were promoting them.”

Source: Securities Fraud Charges Dropped Against Influencers Accused of Stock Manipulation