Man Indicted for Using Twitter to Manipulate Stocks

A 62-year-old man from Scotland has been indicted by a federal grand jury in San Francisco for allegedly using Twitter to post false claims about two companies that negatively affected their stock prices in an attempt to profit from illegal trades.

James Alan Craig of Dunragit, Scotland, has been indicted on one charge of securities fraud. In addition, the Securities and Exchange Commission has filed a similar charge against him in a related civil case.

The complaints against Craig alleged that in January 2013, he created two bogus Twitter accounts that appeared to belong to Muddy Waters Research and Citron Research, two influential short-selling companies. The accounts featured the logos of both companies and had Twitter handles of @Mudd1Waters and @cirtronresearc.

Using these handles, Craig allegedly posted false tweets that Audience, a technology company, and Sarepta Therapeutics, a biopharmaceutical company, had federal investigations pending against them. The tweets resulted in a 28% drop in Audience’s share price and a 16% drop in Sarepta’s share price.

Once the share prices had dropped, Craig then allegedly used his girlfriend’s brokerage account to purchase the depressed shares in Audience and Sarepta Therapeutics, with a plan to resell them after the share prices went up again. While the SEC said these efforts were unsuccessful, the Department of Justice said the alleged scheme cost shareholders of both companies to lose approximately $1.6 million.

According to a news report, these charges are the latest in an effort by the SEC and Department of Justice to prosecute those who use social media to commit stock market fraud. Investor Andrew Left, who runs Muddy Waters and Citron, reported to authorities that the tweets did not come from the two companies. Twitter, Audience and Sarepta were not accused of any wrongdoing.

Craig faces a potential sentence of 25 years in prison and $250,000 in fines for securities fraud. His alleged scheme netted him a total of $97, according to the SEC.

The Cogdell Law Firm is a full service criminal litigation and appellate law firm. We provide client-focused representation at all stages of the process, whether our clients are seeking to avoid charges, have been charged, or are seeking reversal of a conviction on appeal. When results matter most, contact Dan Cogdell at (713) 426-2244 or dan@cogdell-law.com.

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