Fake Takeovers Could Spur SEC Action

Personal Injury Lawyers Philadelphia PA

The SEC is reportedly investigating a fake news story today about a takeover attempt that caused shares of Twitter to surge more than 8 percent briefly, according to Bloomberg News. The shares increased more than $1.50 in trading shortly after 11:30 AM. They had returned their gains by noon when the hoax was revealed.

The report was published on a fake copy of the Bloomberg website using a domain name that appeared somewhat official, bloomberg.market . Bloomberg was not involved in its publication and the website was down later in the afternoon.

This is the second price surge due to a fake takeover recently. In May, a fake filing on the SEC’s EDGAR filing system sent Avon Products soaring more than 20%. The company hadn’t received a takeover bid. The filing remained on EDGAR for several days. By early June, the SEC sought an emergency asset freeze of two trading accounts worth $2 million that it charged with profiting from the scam. The SEC claimed to use parallel trading analysis to focus their search on these two accounts.

I recall that these sort of stock pump and dump schemes were common when the internet was still young (during the run up to the dot com boom and bust), but I thought they had faded away. In today’s hypercompetitive world of fast trading and no research, they are apparently back with a vengeance.

Investors should know this, but you can’t believe everything you read on the internet. Presidential candidate Martin O’Malley’s campaign learned that the hard way last week, as the footnotes to its white paper on the need for Wall Street reform included a reference to a satirical article by The Daily Currant about former attorney general Eric Holder taking a job at JPMorgan with a $77 million salary. After leaving office, Holder returned to his former law firm.

If these sort of activities continue, this could be fertile ground for financial whistleblowers to inform the government about players that are bragging about their success in manipulating the market. Of course, if the SEC needs less than a month to track down these sort of activities, they may not need whistleblowers.

If you have evidence of investor fraud, contact one of our SEC whistleblower attorneys to discuss reporting it to the U.S. Government for a reward. An attorney can be reached by our contact form or calling 1-800-590-4116.

PhotoCredit: mkhmarketing.wordpress.com