The Securities and Exchange Commission announced that a Georgia man has been charged with being part of an illicit trading scheme that involved spreading false rumors about public companies.
The defendant was identified as Milan Vinod Patel of Cumming, Georgia, the fifth person to be charged in the case. The SEC’s complaint alleges that Patel received rumors about publicly-traded companies that he knew to be false from three of the other defendants, Barton Ross, Anthony Salandra, and Charles Parrino. The rumors, which involved purported market-moving events such as corporate mergers or acquisitions, were then spread to Patel’s contacts at financial news services, chat rooms, and message boards.
Patel is also accused of disseminating the rumors to the host of a stock trading webcast, Mark Melnick, who then shared them with his subscribers. According to the SEC, over 100 false rumors were circulated between December 2017 and January 2020. These rumors caused the companies’ stock prices to rise temporarily and Patel was able to sell his holdings for over $1 million in illicit profits, according to the complaint.
“Out of the five individuals involved in this scheme, we allege that Patel played the central role of using his contacts to repeatedly spread the false rumors via the internet, generating more than $1 million in illicit profits for himself,” said Joseph G. Sansone, Chief of the Enforcement Division’s Market Abuse Unit. “Today’s action seeks to hold Patel accountable for his alleged misconduct and serves as a warning to others who might engage in similar schemes.”
Under the complaint filed in federal court for the Northern District of Georgia, Patel was charged with violating 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.
The attorneys at Lewitas Hyman have decades of experience dealing with securities fraud cases and have a deep understanding of how capital markets and financial service firms are intended to work to protect investors. We bring a unique level of knowledge and experience when representing the rights of investors, including resolving cases through arbitration and litigation when necessary. If you think your financial professional or firm engaged in misconduct that caused you investment losses, contact Lewitas Hyman at (888) 655-6002 or through our online contact form for a no-cost evaluation of your matter.