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SEC Charges Trader for Social Media Stock Manipulation Scheme
The U.S. Securities and Exchange Commission has frozen assets and filed fraud charges against a stock trader who allegedly used Twitter to manipulate stock prices, highlighting growing concerns about social media’s role in financial markets.
On March 15, the SEC announced charges against Andrew L. Fassari, who operated under the Twitter handle @OCMillionaire, for spreading false information about Arcis Resources Corporation (ARCS), a defunct company, while profiting substantially from trading its shares.
According to the SEC’s allegations, Fassari purchased over 41 million shares of ARCS in December 2020 before disseminating misleading claims to thousands of followers. The trader falsely stated that ARCS was reviving operations, expanding business, and had secured backing from “huge” investors. After these misleading tweets caused the stock price to surge over 4,000%, Fassari allegedly sold his entire position for profits exceeding $929,000.
“We allege that Fassari profited by using social media to deceive investors,” said Melissa R. Hodgman, Acting Director of the SEC’s Division of Enforcement. “The SEC is committed to protecting investors by proactively monitoring suspicious trading activity tied to social media, and by charging those who use social media to violate the federal securities laws.”
The case represents a classic “pump and dump” scheme, now adapted for the social media age. The SEC is seeking a permanent injunction, disgorgement of profits, prejudgment interest, and civil penalties against Fassari for violating antifraud provisions of federal securities laws.
This enforcement action comes amid increasing regulatory attention on market manipulation through social media platforms. In January 2021, during a period of extreme market volatility, the SEC’s Office of Investor Education and Advocacy (OIEA) issued an alert specifically warning retail investors about the dangers of making investment decisions based on social media information.
The alert explained how fraudsters frequently exploit online platforms to manipulate stock prices, noting that in pump and dump schemes, “fraudsters pump up a company’s stock price by making false and misleading statements to create a buying frenzy, and then sell shares at the pumped up price.” The agency also warned about negative rumor campaigns designed to artificially depress stock prices.
The OIEA’s warnings build upon previous alerts regarding social media’s role in disseminating investment misinformation. An earlier alert noted that social media enables fraudsters to “spread false or misleading information about a stock to large numbers of people with minimum effort and at a relatively low cost,” while concealing their identities or even impersonating credible market information sources.
Both SEC alerts encourage potential whistleblowers to report suspected securities violations through the SEC Whistleblower Program. Established in 2010 under the Dodd-Frank Act, this program has become a critical enforcement tool, helping the agency uncover difficult-to-detect misconduct that has resulted in more than $2.7 billion in monetary sanctions.
The program offers significant protections for whistleblowers, including confidentiality and anti-retaliation measures. Qualified whistleblowers who provide original information leading to successful enforcement actions can receive awards ranging from 10% to 30% of funds recovered. Since the beginning of fiscal year 2021 on October 1, 2020, the SEC has awarded approximately $197 million to 37 whistleblowers—a record amount for a single fiscal year.
As social media continues to influence financial markets, the SEC’s enforcement action against Fassari signals the agency’s determination to combat emerging forms of market manipulation in the digital age, while leveraging whistleblower information to identify and prosecute securities law violations.
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10 Comments
This case highlights the risks of relying too heavily on unverified social media claims when making investment decisions. Investors should always do their own research and be wary of pump-and-dump schemes, even on platforms like Twitter.
Absolutely. Social media is a powerful tool, but it can also be abused to mislead investors. Kudos to the SEC for cracking down on this trader’s manipulative tactics.
This case is a sobering reminder that not everything you read on social media can be trusted, especially when it comes to investment advice or stock tips. Kudos to the SEC for taking swift action to hold this trader accountable.
Agreed. Investors need to be extremely cautious about making decisions based on unverified social media claims. The SEC is right to crack down on these kinds of manipulative tactics.
Interesting to see the SEC cracking down on social media stock manipulation schemes. Spreading false info to pump up a defunct company’s stock price and then cashing out is a clear violation of securities laws. Curious to see how the SEC will address this growing issue in the digital age.
Agreed, the SEC needs to stay vigilant as social media allows bad actors to easily spread misinformation and manipulate markets. Glad they are taking action against this trader.
While the expansion of social media has democratized financial information, it has also enabled new forms of market manipulation. The SEC’s actions here send an important message that they will not tolerate the exploitation of these platforms for personal gain at the expense of investors.
Well said. The SEC is right to prioritize protecting the integrity of the markets in the face of these emerging social media-driven schemes.
The SEC’s focus on social media market manipulation is a positive step, but the challenge will be staying ahead of bad actors who continually find new ways to exploit these platforms. Ongoing vigilance and education for investors will be key.
That’s a great point. As social media and financial markets evolve, the SEC will need to remain proactive to identify and address emerging manipulation tactics. Educating investors is critical.