James Alan Craig, a Scottish man accused of operating a stock trading scam by issuing bogus press releases via official-looking Twitter accounts, has been indicted on criminal charges and sued by the Securities and Exchange Commission, according to Courthouse News Services. Craig, 62 years old, reportedly resides in Dumfries & Galloway, Scotland.
He is accused of using the Twitter handles @Mudd1waters and @Citreonresearc, which both appear to now be inactive.
In the complaint published by the SEC, the watchdog accuses Craig of crafting Twitter accounts with names and images to confuse users into believing that tweets were coming from the research firms Muddy Waters and Criterion.
In January 2013, using the fake Muddy Waters Research Twitter account, Craig is accused of sending out several tweets stating that Audience, Inc. was “being investigated by DOJ on rumored fraud charges” and that Audience intended to hold back its annual report.
Shortly after Craig’s tweets, the shares of Audience dropped by 28 percent, to $8.87. The NASDAQ halted trading in Audience shares for a short period while it investigated the unwarranted meltdown. Craig is alleged to have used his girlfriend’s stock trading account to purchase $3,549 worth of Audience stock that day.
By the end of the day, the market realized that the tweets were a hoax after the real Muddy Waters tweeted that it had issued no research about Audience, and the shares rebounded to close to where they started the day at $12.28. Had he captured the full move of the stock, Craig stood to earn close to $1,000. For whatever reason, once he closed his trades that day, the Twitter fraudster had netted a measly $9.
Perhaps disappointed with his poor take, Craig struck again. This time he allegedly set up a Twitter account mimicking the firm Criterion Research. The stock that account’s tweets targeted was that of Sarepta Therapeutics, Inc. (NASDAQ: SRPT).
With Sarepta, Craig allegedly sent out tweets stating that the company’s findings from a drug trial were “tainted” and that the U.S. Food and Drug Administration had seized documents. Shares reportedly fell from $29.30 to $24.50, about 16 percent, within minutes of the first tweets appearing. The price of the stock was said to recover within five minutes to $28.32.
Similar to his Audience outing, James Craig reportedly invested $19,537 in SRPT shares that day. Had he captured the full 16 percent move, he stood to make over $3,000. Somehow, all Craig could manage to take out of a market that he had rather successfully rigged to his advantage was a reported $88.
The SEC, on the other hand, says that Craig’s schemes ended up costing U.S. shareholders close to $1.5 million.
“Craig’s false tweets and manipulative conduct caused substantial market disruption and loss, and caused Nasdaq to halt trading in a security,” the SEC complaint reads. “In reaction to Craig’s false and misleading tweets and the subsequent drop in price, certain Audience and Sarepta investors sold hundreds of thousands of shares during each of the temporary stock price depressions and sustained estimated losses of approximately $1.5 million total.”
The SEC is reportedly asking for an injunction to prevent James Craig from attempting schemes like this again. Additionally, Craig faces up to 25 years on prison and $250,000 in fines for a charge of securities fraud.
“This prosecution makes clear that we will find and prosecute those who commit fraud on our stock exchanges, by any means, no matter where they reside,” Brian Stretch, the acting northern California U.S. attorney stated about James Craig.
[Feature Photo by Andrew Burton/Getty Images]