U.S. SEC obtains asset freeze to halt alleged penny stock scheme on Twitter

FILE PHOTO: The Twitter logo is displayed on a screen on the floor of the New York Stock Exchange in New York City, U.S., September 28, 2016. REUTERS/Brendan McDermid

(Reuters) -The U.S. Securities and Exchange Commission (SEC) said on Tuesday it obtained an injunction and asset freeze against a man behind a popular Twitter account that promoted the trading of penny stocks before selling them at inflated prices.

The SEC alleges that since at least December 2019, Steven Gallagher, 50, of Maumee, Ohio, manipulated stocks by sending thousands of tweets using his handle @AlexDelarge6553 to encourage his numerous followers to buy stocks in which Gallagher had secretly amassed holdings, according to the complaint https://bit.ly/3bgJua1.

"The complaint alleges that Gallagher used his followers for his own financial gain, tweeting out false advice to pump up the price of stocks he owned, so he could sell for a profit," said Richard Best, director of the SEC's New York Regional Office. "This case is a reminder that investors should be wary of taking financial advice from unverified sources on Twitter and other social media platforms."

The SEC said it has imposed a permanent injunction, disgorgement, prejudgment interest, civil penalties and a freezing of Gallagher's assets.

A representative of Gallagher could not immediately be reached for comment.

The U.S. Department of Justice also said in a related charge that Gallagher had been arrested for additional violations, including wire fraud and market manipulation, after he gained over 70,000 followers related to the same pump-and-dump scheme. The charge also specified that Gallagher earned over $1 million in profit.

The SEC's charges come after the agency in February suspended trading in the securities of 15 companies because of "questionable trading and social media activity."

The top markets watchdog has also pushed to address soaring interest by retail investors fueled by social media platforms, most notably in the January surge and subsequent plunge of GameStop Corp's share price.

(Reporting by Kanishka Singh in Bengaluru and Katanga Johnson in WashingtonEditing by Leslie Adler and Matthew Lewis)

Article type: metered
User Type: anonymous web
User Status:
Campaign ID: 46
Cxense type: free
User access status: 3
Join our Telegram channel to get our Evening Alerts and breaking news highlights


Next In Tech News

Lead ‘em then leave ‘em: tech founders who quit
Twitter bans sharing of photos without consent
SG fresh graduate jailed four weeks for taking upskirt video, can’t recall number of victims
Kok Lanas, Kelantan state assemblyman Datuk Seri Haji Md Alwi Haji Che Ahmad is new MDEC chairman
Singapore tests out ‘smart bandage’ for remote recovery
New Twitch tool helps battle ban evaders
Bill and Melinda French Gates split giving pledge after divorce
AI vigilantes fuel censorship fears in Russian cyberspace
Google to ban political advertising ahead of Philippine election
Cathie Wood's ARK buys a million Twitter shares after Dorsey steps down

Others Also Read