Scottish stock market trader 'cost shareholders £1m with fake tweets'

James Craig is alleged to have taunted US investigators suggesting they were unlikely to catch the person responsible

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The Independent Online

A British stock market trader is accused of sending out fake tweets to profit from the share price turmoil. He then later is alleged to have taunted US investigators suggesting they were unlikely to catch the person responsible.

James Craig, of Dunragit, near Stranraer, Scotland tweeted false messages about two American companies according to fraud charges filed by US regulator, the Securities and Exchange Commission (SEC).

Court documents claim Mr Craig, 62, cost shareholders more than $1.6m (£1.05m) as a result. He is accused of buying and selling shares in both companies in an attempt to profit when the stock rebounded, the SEC said.

According to the Californian court complaint, Mr Craig tweeted false statements in 2013 about two companies, Audience and Sarepta Therapeutics, on Twitter accounts he created to look like those of well-known securities research firms.

Several tweets, suggesting Audience was under US 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.

Further alleged tweets that claimed Sarepta Therapeutics was also subject to an investigation. The social media messages falsely stated the biopharmaceutical company had tainted drug trial results and a US government agency had seized documentation as a result. The firm’s share price fell 16 per cent as a result.

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.

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

FBI Special Agent David Johnson, said: “This investigation dismantled a stock market manipulation scheme that operated to falsely defame a company to destroy its stock value for financial gain.”

Court documents show the SEC is seeking a “permanent injunction against future violations” and a “monetary penalty” against Mr Craig.

Court records in San Francisco did not show whether Mr Craig had instructed lawyers to defend the allegations. He was unavailable for comment.

The SEC case against Mr Craig is a civil rather than a criminal matter so he will not face arrest or extradition to the US. Lawyers for the SEC have still to indicate whether they will be seeking a trial before a jury or just a judge alone.

Mr Craig must answer the charges set out against him in court or reach an out of court settlement.

The SEC also issued an Investor Alert called “Social Media and Investing – Stock Rumours” which warns investors about fraudsters who manipulate share prices by using social media to spread false or misleading information about stocks.