A U.K. man was indicted in San Francisco today for allegedly using Twitter to defame technology companies, tanking their stock so he could buy it at a lower price, federal prosecutors said.
Through the scheme, prosecutors say 62-year-old James Allen Craig of Dunragit, Scotland, cost shareholders of Bay Area-based sound technology company Audience and Washington-based biopharmaceutical firm Sarepta more than $1.6 million.
Craig allegedly set up Twitter accounts that resembled market research firms to spread false information about the companies, buying hundreds of shares of securities once their price dropped.
On Jan. 25, 2013, he set up a Twitter account with the handle @Mudd1Waters to pose as market research firm Muddy Waters Research, using the logo of that company and the name of the company’s founder on the account.
Through that account, he spread false information that Audience was under investigation for fraud by the U.S. Department of Justice. The price of Audience shares fell and Craig used his girlfriend’s TradeMonster account to purchase 400 shares of Audience securities, which he later sold at a profit, according to prosecutors.
On Jan. 29, 2013, he allegedly conducted a similar scheme posing as Citron Research and spreading false information that the federal Food and Drug Administration was seizing Sarepta documents, according to prosecutors.
When security prices fell for that company, Craig again used his girlfriend’s TradeMonster account to purchase 700 shares and sold them at a profit, prosecutors said.
He was charged with a single count of securities fraud and was also charged in a separate complaint by the Securities and Exchange Commission, according to prosecutors.
If convicted of the charges, Craig could face up to 25 years in prison and a fine of $250,000 as well as restitution, prosecutors said.
Scott Morris, Bay City News