Eight social media influencers were there calculated with securities fraud after allegedly participating in a “pump and dump” scheme of stock exchange trading.
The Security and Exchange Commission and the Justice Department filed parallel indictments against the eight people they accused of scamming their followers on Twitter and Discord, two popular social media platforms.
The defendants claimed they were multi-million dollar stock gurus and encouraged their followers to buy into their stock picks.
Prosecutors said that instead of enriching their victims, they were dragging them into a “pump and dump” scam.
A “pump-and-dump” stock market scam is a popular operation in which victims are encouraged to buy certain stocks with the promise that they will appreciate in value. The scammers also hold these stocks and the demand causes the stock price to rise rapidly. The scammers then sell their holdings for a large profit without informing the victims, who hold the bag if the stock subsequently falls in value.
Investigators said some of the influencers added disclaimers that they didn’t offer financial advice, but that they did and made more than $100 million from it.
“Not a professional, not financial advice, probably do the opposite” read the waiver of one of the defendants.
“DISCLAIMER: My tweets are NOT recommendations to buy a stock. – Ideas shared on Twitter are NOT buy or sell signals. DO NOT ACT BASED ON SOCIAL MEDIA” read another disclaimer.
One of the accused is a podcaster who invited influencers to his show to encourage listeners to buy the fraudulent stocks.
The indictments accuse the influencers of offering false and misleading information while profiting financially to the detriment of their victims.
Some of the influencers’ Twitter accounts have been shut down. They had gained hundreds of thousands of followers.
Here is a news video about influencer fees:
SEC, DOJ Charge 8 Social Media Influencers A $100M Schemewww.youtube.com
https://www.theblaze.com/news/socia-media-influencer-pump-dump Social media influencer charged with alleged $100m pump-and-dump stock manipulation scam