If you've ever heard the words "this is not financial advice" or "this is not stock advice", you're in for a treat. Federal law enforcement alleged that hundreds of thousands of would-be traders were using their fans to bet big on stock trades, all the while expecting prices to tank.
The indictment was filed in the US District Court for the Southern District of Texas. According to the U.S. Department of Justice, these were the handles used by these people. Federal law enforcement said that all of these accounts were planning to dump their shares when the stock price went up, because they were hyping up certain companies by posting false information to their thousands of followers on social media.
Between them, the alleged fraudsters had hundreds of thousands of followers who were potentially listening to their stock advice while soaking up a lot of inane " dude bro" messages posted to their accounts. Eight people were named in the indictment.
According to the DOJ, Knight was involved in the scheme through his show Pennies: Going in Raw that he hosted with Mitchell Hennessey. There are multiple counts of securities fraud and conspiracy in the indictment.
There was no attorney information for the person. According to court documents, he pleaded not guilty after he was arrested at his home.
The SEC also revealed charges against the eight individuals after the DOJ revealed its indictment. The scheme is a classic example of apump and dump, where fraudsters inflate the value of a stock in order to cash out later. The financial experts were making a lot of money by bumping up the price of some stocks.
The SEC said in a release that the defendants used social media to amass a large following of novice investors and then took advantage of their followers by feeding them a steady diet of misinformation.
In order to accentuate the allegations, the indictment dives into transcripts of recordings from some of theinfluencers as they chat openly about their scheme. The SEC said that the people thought their conversations were private but they were being recorded. One of Knight and Tom Cooperman's co-conspirators, who went unnamed in the indictment, was afraid of being caught, when Knight and Tom Cooperman talked about their scheme to pump up the value of GTT Communications' stock price. The person asked Knight if he wanted to do it the right way.
“The f*cking right way? We’re robbing f*cking idiots of their money.”
The conspirators spelled it out clearly in their chats.
“Like, what [RYBARCZYK] does is he alerts it, and then, like, five minutes later all his little minions start, like, retweeting it, and saying ‘added with him,’ so it, like, builds the hype back up. It happens every single time. They have this sh*t down to a f*cking science. It’s great.”
According to the SEC, Rybarcyzk told his followers that it wasn't his goal to only make him prosperous. All of you should prosper. Every one of you will make it. The market is not restricted to one group. Current conditions are what you adapt to. Go crazy.
While Matlock's account was disabled on Wednesday, several other people were still talking about stock prices on the internet. By the time they stopped messaging, they were promoting companies like State Street Global Advisors.
Knight said he was thinking about becoming an antivaxer. Is there any antivaxxers that I can turn to? I love my friends on here. You can swing on my nuts.
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