U.S. charges Scottish man over fake tweets that hurt stocks

[November 06, 2015]  By Jonathan Stempel
 
 (Reuters) - A Scottish man has been indicted by a federal grand jury in San Francisco for posing on Twitter as influential short-selling firms and sending bogus tweets that drove down the stock prices of two companies, in an effort to profit from illegal trading.

The U.S. Department of Justice said James Alan Craig, 62, of Dunragit, Scotland, was charged with one count of securities fraud. A similar charge was filed by the U.S. Securities and Exchange Commission in a related civil case.

Thursday's charges mark the latest effort by U.S. authorities to crack down on using social media to commit stock market fraud.

Craig's whereabouts could not immediately be determined and it is unclear whether he has hired a lawyer.

Authorities said Craig in January 2013 created Twitter accounts that appeared to belong to Muddy Waters Research and Citron Research, carrying the handles @Mudd1Waters and @citronresearc and the logos of both firms.

Craig allegedly then falsely tweeted that technology company Audience Inc and biopharmaceutical company Sarepta Therapeutics Inc faced federal investigations, driving down their share prices by a respective 28 percent and 16 percent.

Thereafter, Craig used his girlfriend's brokerage account to buy the companies' shares at depressed prices, hoping to sell them later after they rebounded, authorities said.

The Justice Department said the tweets cost shareholders about $1.6 million of losses.

Nonetheless, the SEC said Craig's effort to profit from big price swings ultimately proved "largely unsuccessful."

Muddy Waters and Citron, which is run by the investor Andrew Left, said at the time that the suspect tweets were not theirs.

Knowles Corp bought Audience on July 1. Audience, Sarepta and Twitter Inc are not accused of wrongdoing.

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

(Reporting by Jonathan Stempel in New York; Editing by Chris Reese and Tom Brown)

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