US charges 8 in social media 'pump-and-dump' stock scheme

WASHINGTON (AP) — The government on Wednesday charged eight men of earning more than $100 million in illicit stock market profits by manipulating their novice-investor followers on social media.

The Justice Department and the Securities and Exchange Commission said that from early 2020 to around April of this year the men, who had combined following of over 1.5 million on Twitter, ran a “pump-and-dump” scheme.

Seven of the social-media influencers promoted themselves as successful traders on Twitter and in Discord chat rooms and encouraged their followers to buy certain stocks, the SEC said. 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 agency said.

“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,” 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 (@PJ_Matlock), John Rybarcyzk (@Ultra_Calls) and Edward Constantin (@MrZackMorris) of Texas; Thomas Cooperman (@ohheytommy) and Gary Deel (@notoriousalerts) of California; Mitchell Hennessey (@Hugh_Henne) of New Jersey; and Stefan Hrvatin (@LadeBackk) of Florida.

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

The Justice Department said the defendants showcased their "extravagant lifestyles" to fool others into thinking they were skilled stock traders.

If convicted, each faces a maximum penalty of 25 years in prison for conspiracy to commit securities...