SEC charges 8 social media influencers with boosting ‘meme stocks’ then selling their shares

The SEC said that the seven users promoted stocks to "hundreds of thousands of followers" and then sold their positions after the stocks increased in price, which included the sale of so-called "meme stocks."

The SEC accuses the group of the behavior since at least January 2020. It involved a nationwide network of participants, including four defendants in Texas, two in California, one in New Jersey, and one in Florida.

"As our complaint states, 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, which resulted in fraudulent profits of approximately $100 million," said Joseph Sansone, Chief of the SEC Enforcement Division’s Market Abuse Unit.

"Today’s action exposes the true motivation of these alleged fraudsters and serves as another warning that investors should be wary of unsolicited advice they encounter online."

A statement from the SEC continues: "The complaint further charges Daniel Knight (Twitter Handle @DipDeity), of Texas, with aiding and abetting the alleged scheme by, among other things, co-hosting a podcast in which he promoted many of the other individuals as expert traders and provided them with a forum for their manipulative statements. Knight also traded in concert with the other defendants and regularly generated profits from the manipulation.

"The SEC's complaint, filed in the U.S. District Court for the Southern District of Texas, seeks permanent injunctions, disgorgement, prejudgment interest, and civil penalties against each defendant, as well as a penny stock bar against Hrvatin. Criminal charges against all eight individuals also were filed in a parallel action brought by the Department of Justice’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Texas."