US Securities And Exchange Commission Freezes Account Of Steven Gallagher Suspected Of Using Twitter For Stock Fraud

Many stock fraud attempts are now using Twitter accounts. (photo: doc. unsplash)

JAKARTA— The US Securities and Exchange Commission (SEC) said Tuesday, Oct. 26 that it obtained an injunction and asset freeze on the Twitter account of a popular man who promoted trading penny stocks before selling them at inflated prices.

The SEC alleges that since at least December 2019, 50-year-old Steven Gallagher, of Maumee, Ohio, manipulated stocks by sending thousands of tweets using the @AlexDelarge6553 account to encourage his many followers to buy stocks in which Gallagher had secretly amassed holdings.

"The complaint alleges that Gallagher used his followers for his own financial gain, tweeting false suggestions to increase the price of the stock he owns, so he could sell for a profit", said Richard Best, director of the SEC's New York Regional Office.

"This case is a reminder that investors should exercise caution in taking financial advice from unverified sources on Twitter and other social media platforms", Best said as quoted by Reuters.

The SEC said it had imposed a permanent injunction, revocation, presumption interest, civil penalties, and a freeze on Gallagher's assets. Gallagher's representatives could not immediately be reached for comment on the case.

The US Justice Department also said in related allegations that Gallagher had been arrested for additional offenses, including wire fraud and market manipulation after he gained more than 70,000 followers linked to the same pump-and-dump scheme. The allegation also states that Gallagher made more than $1 million in profits.

The SEC's allegations came after the agency in February suspended trading in securities from 15 companies for "questionable trading and social media activity".

Top market watchdogs have also been pushing to tackle surging interest by retail investors fueled by social media platforms, particularly in the January spike and subsequent decline in GameStop Corp's share price.