The host of a stock trading webcast has been charged with spreading false rumors about public companies as part of an alleged “market manipulation scheme,” according to AdvisorNews.
The Securities and Exchange Commission filed a complaint in United States District Court against Mark Melnick on September 30. The allegations specified in the complaint were that between 2018 and 2020, Melnick received advance notice of companies about which another participant in the scheme planned to spread false rumors, then shared the names of those companies with subscribers to his online trading room.
Melnick told subscribers he had taken positions in the companies. Others involved in the scheme spread the false rumors through financial news services, chat rooms, and message boards. The prices of the companies’ securities rose temporarily as a result of the rumors. According to the SEC, Melnick spread the rumors over 100 times in order to make over $374,000 in illicit profits.
Melnick was charged with violating the antifraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.
Kristina Littman, Chief of the Enforcement Division’s Cyber Unit, said “We will continue to work aggressively with our law enforcement partners to detect and punish schemes that undermine the integrity of our markets.”
Barton Ross was previously charged by the SEC for his participation in the scheme.
The SEC said Melnick agreed to cooperate with the Enforcement Division. He was ordered to pay disgorgement of $374,835 plus prejudgment interest and a civil penalty. He will also be permanently enjoined from violating the antifraud provisions of the federal securities laws and will be barred from the securities industry. The U.S. Attorney’s Office said Melnick pleaded guilty to criminal charges related to the scheme.
Investors incur losses when companies, corporate insiders, hedge funds, private placement issuers, financial advisors and other financial professionals make false or misleading statements or fail to disclose material information. If you are an investor who has been sustained losses due to this type of misconduct, contact Lewitas Hyman at (312) 291-4600 or through our online contact form to arrange a free consultation regarding your case.