Busted! Guy who used Twitter to manipulate stock market indicted

wall street
This story’s too big for 140 characters: Fake Twitter accounts used to manipulate the U.S. stock market led to the indictment of a 62-year-old Scottish trader by the U.S. Attorney for Northern California.

The man, named as James Craig in the indictment, is accused of creating two bogus Twitter accounts under the guise of market research firms. He then used the fraudulent profiles to tweet misinformation about publicly traded stocks, allowing him to buy up shares when prices plummeted.

Craig’s alleged scam reportedly cost shareholders $1.8 million, although he himself is said to have been unsuccessful in profiting from the shares that he purchased.

Craig’s Twitter accounts impersonated market research firms Muddy Waters Research and Citron Research. According to a document filed by the Securities and Exchange Commission, a typical tweet disseminated in 2013 from one of the fake accounts stated that Audience (a Bay area tech firm) was being investigated by the DOJ on fraud charges. This resulted in the company’s stock falling a whopping 28 percent.

On another occasion, Craig tweeted about Sarepta Therapeutics — a public biopharmaceutical company — claiming the Food and Drug Administration had seized the company’s drug trial papers due to certain trial results being tainted. This, states the SEC, caused the company’s share price to drop to a low of “16 percent below where it had traded just before the false tweets.”

To capitalize on the fall, Craig bought shares in both Audience and Sarepta — up to 400 in the former — before the SEC managed to halt trading. The SEC adds that Craig remained unsuccessful in his efforts to profit from the scam as he took too long to trade the stock, making as little as $100 in total. Oops.

In an ironic turn of events, Craig had previously tweeted that the SEC needed to arrest someone for the fraudulent tweets. Referring to Craig’s statements, the SEC’s San Francisco director Jina Choi noted: “Craig also said in later tweets that the SEC would have a hard time catching the perpetrator. As today’s enforcement action demonstrates, those tweets turned out to be false as well.” Double oops.

Craig currently faces both an SEC lawsuit and a DOJ indictment. However, a spokesperson for the U.S. Attorney told Ars Technica that there is at present no public information regarding his whereabouts.

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