The U.S. Securities and Exchange Commission (SEC) Thursday charged a Florida trader with fraud for writing and disseminating a fake press release to manipulate stock price.
The SEC alleged that Richard Karp created the phony press release as an announcement from WCI Communities, Inc., and he faxed it to media outlets in an effort to manipulate the stock price of the Florida-based luxury home building company, whose stock was traded on the New York Stock Exchange.
The bogus press release falsely stated that WCI's board of directors received a buyout offer potentially worth 220 million U.S. dollars. After this fake news was reported publicly by media outlets, WCI's share price increased dramatically and Karp quickly sold his shares to generate his illegal profits.
"As alleged in our complaint, Karp actively traded in WCI's stock while hoping that a major shareholder would make a buyout offer," said David Nelson, director of the SEC's Miami Regional Office in a statement.
"When that didn't happen, Karp tried to take the news into his own hands to enrich himself and cheat the investing public," he said.
The SEC's complaint, filed in the U.S. District Court for the Middle District of Florida, alleged that the fake news was consequently reported by at least four Fort Myers media outlets and Karp reaped approximately 29,000 dollars in illegal profits.
The SEC said that it is seeking a permanent injunction, disgorgement of ill-gotten gains plus prejudgment interest and the imposition of a financial penalty against Karp.
Source: Xinhua
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