Social media influencers charged in $100M 'pump and dump' scheme

Seven social media influencers have been charged with securities fraud by the Department of Justice (DOJ) and the Securities Exchange Commission (SEC) for misleading the investing public in an alleged 'pump and dump' investor scheme that resulted in over $100 million in profits.

A 'pump and dump' investor scheme is when corporate, social or influential industry leaders promote a stock to increase share price and trading volume without disclosing their plans to later sell the stock once a certain share price or trading volume is achieved.

According to a CNBC report, the SEC alleges that the scheme goes back to at least January 2020, and involves the seven influencers, all of whom had at least 100,000 followers on Twitter: Edward Constantinescu, Tom Cooperman, Gary Deel, Mitchell Hennessey, Stefan Hrvatin, Perry 'PJ' Matlock and John Rybarczyk.

An eighth person, Daniel Knight, was charged with aiding and abetting the scheme as a host of a podcast that backed several individuals claims as stock market veterans.

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The allegations include members of the group using investor chatrooms on the platform Discord to pretend they were expert investors, generating a larger following to buy the stock and increase its price. Once certain share prices were achieved, individuals then sold their stock for profitable returns. The group faces both civil and criminal lawsuits.

In an assumed reaction to the charges, both Knight and Rybarczyk have modified their Twitter pages to claim that their opinions are not directives to buy a specific stock.