Scottish man indicted for using Twitter to manipulate stock prices

A Scottish man who allegedly set up a Twitter account with a handle resembling Muddy Waters Research was charged by the US with stock manipulation for posting a rumor of a fraud probe that halted trading in Audience Inc.

A federal grand jury in San Francisco indicted 62-year-old James Alan Craig of Dunragit, Scotland, on Thursday.

Several tweets, suggesting Audience was under United States government investigation, are said to have caused the share price of the mobile audio company to fall 28 per cent before the stock market authorities temporarily halted trading. The next day, Craig’s false tweets about a different company caused a 16 percent decline in that company’s share price.

Craig bought and sold shares of the target companies on both occasions in an attempt to profit from the sharp price swings. He then “tweeted multiple false statements” saying two companies were under investigation.

The criminal case is USA v. Craig, U.S. District Court, Northern District of California, No. 15-cr-00517.

Jina Choi, director of the SEC’s San Francisco regional office, said: “Craig’s fraudulent tweets disrupted the markets for two public companies and caused significant financial losses for their investors”.

They allege he sent false Tweets that two companies were facing fraud inquiries – resulting in their stock prices plunging.

A British stock market trader is accused of sending out fake tweets to profit from the share price turmoil.

The SEC’s charges date back to January 2013 where Craig allegedly falsely claimed Audience was under investigation. Craig used Citron Research’s logo as the Twitter account’s profile picture in an effort to make the account appear to be associated with the firm. The Securities and Exchange Commission filed a separate complaint today charging Craig with securities fraud.

The SEC is aiming for a permanent injunction against future violations, disgorgement, and a monetary penalty from Craig.