Scot facing US charges over Twitter ‘share scam’

A SCOTTISH stock market trader is facing fraud charges in the US over tweets authorities claim were intended to manipulate the stock prices of two companies.

The man is accused of buying and selling shares in an attempt to profit when the stock rebounded. Picture: Getty

The US Securities and Exchange Commission (SEC) announced it had filed securities fraud charges against James Craig, 62, of Dunragit, near Stranraer, in a federal court in California.

According to the SEC’s complaint, Craig allegedly tweeted false statements in 2013 about two companies, Audience and Sarepta Therapeutics, on Twitter accounts he created to look like the real Twitter accounts of well-known securities research firms.

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Several tweets, suggesting Audience was under federal investigation, were said to cause the share price of the mobile audio company to fall 28 per cent before the Nasdaq temporarily halted trading.

Further alleged tweets that claimed Sarepta Therapeutics was also subject to an investigation sent stock in the drug firm tumbling by 16 per cent. Craig is accused of buying and selling shares in both companies in an attempt to profit when the stock rebounded, the SEC said. His whereabouts are unknown and it is unclear whether he has hired a lawyer.

He has been indicted by a federal grand jury in San Francisco, where prosecutors claimed shareholders had lost more than £1.05 million as a result.

Craig also allegedly used separate Twitter accounts to tweet that the SEC – which has now filed charges against him – needed to arrest someone for the fraudulent Audience and Sarepta tweets.

The trader tweeted himself back using another handle, saying “what could you arrest them for?”

The other Twitter handle tweeted back, “Are you serious? did you read my post? it’s called securities fraud.”

SEC’s complaint charges that Craig committed securities fraud in violation of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. The complaint seeks a permanent injunction against future violations, disgorgement and a monetary penalty from Craig.

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

“Craig also said in later tweets that the SEC would have a hard time catching the perpetrator. As yesterday’s enforcement action demonstrates, those tweets turned out to be false as well.”

FBI special agent in charge David Johnson said: “This investigation dismantled a stock market manipulation scheme that operated with one goal in mind – to falsely defame a company in order to destroy its stock value for financial gain.”

Financial writer Tom Petrino, a former business correspondent for the LA Times, said that Craig was a “lousy trader” who made less than $100 (£66) from the alleged fraud.

Police Scotland said they had been asked by the FBI last year to help with the case.

A police spokesman said: “We can confirm that Police Scotland was asked by the FBI to assist with an investigation into allegations of fraud concerning a 62-year-old man from Scotland.

“Officers executed a search warrant at an address near to Stranraer on behalf of the FBI.”