Curb.
The SEC alleged that the company engaged in illegal stock promotion.
According to the SEC, a media company was paid by Medallion Financial to post positive investment articles.
Over the years, the stock of Medallion Financial has been hammered due to the ride-sharing companies.
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The SEC alleged that the company and its president and COO, Andrew Murstein, engaged in illegal stock promotion activities.
According to the SEC complaint, the company hired a media strategy company to publish more than 50 positive articles and hundreds of positive comments about the company on various websites, including on investment-themed platforms SeekingAlpha and TheStreet.com.
The California-based media company Ichabod's Cranium was engaged by Medallion to create fake identities so their opinion articles would appear credible to potential investors.
Richard Best, Director of the SEC New York Regional Office, said thatMurstein paid for more than 50 articles and hundreds of positive comments, which were really paid advertisements placed across the web in an effort to deceive investors about the value of Medallion's stock.
Taxi medallions allow cab drivers to operate in cities. They were attractive investments because of their constrained supply. The arrival of ride-sharing companies changed that.
The S&P 500 is up more than 160% since the beginning of the year, while the share price of Medallion has fallen by more than 43%.
The company was accused by the SEC of inflating the carrying value of its subsidiary to help offset losses in its taxicab loans. The company hired a new firm to provide an increased valuation of the bank after the appraisal firm refused to increase its valuation of the company.
The SEC is accusing Murstein and Medallion of violating anti-fraud, books and records, anti-touting, and internal controls provisions of federal securities laws. Murstein is accused of making false statements to the auditor. Ichabod's Cranium and its owner are being charged with fraud.
The SEC wants civil penalties, permanent injunctions, and disgorgement of ill-gotten gains. The agency wants to ban Murstein from holding officer and director positions.
In a statement, the company said it will fight the charges and will be vindicated. In afternoon trades, Medallion's stock lost less than 30%.
Markets Insider.
Business Insider has an original article.
