The Securities and Exchange Commission accused a social media promoter of recommending penny stocks to his millions of Twitter followers and allegedly raising the price to sell his shares for a profit.
According to the complaint of the SEC Filed in federal court in the Central District of California, Michael M. Beck earned about $870,000 in his successful attempts at “scalping,” which is when a promoter recommends a stock they currently hold and are planning to sell (or are already in the process of selling). Huh) )
Beck, who is based in San Pedro, Calif., used the Twitter handle “@BigMoneyMike6” between 2017 and 2019, and according to the SEC, she had more than 3 million followers. He will use his handle to get followers to sign up for his newsletter, “TeamBillionaire”. In the email, Beck described the newspaper as “a network of merchant-for-merchant”; The newsletter eventually had over 740,000 followers.
But during this time, Beck was buying shares from microcap issuers either directly or through the accounts of his mother, Helen Robinson, who is also named as the relief defendant in the complaint. Beck, who now owned Microcap shares, would then tweet to followers that a stock pick alert would come soon. A few days before any public unveiling, Beck will email his newsletter followers, identifying the stock recommendation he will post on Twitter and giving those followers a chance to buy before revealing anything on social media, according to the commission. .
“This preview of the stock recommendation generally increased the trading volume and price of the stock, making the stock more attractive to potential investors when Beck issued his public recommendation,” the complaint read.
According to the SEC, Beck sometimes paid third parties to post his positive messages about his shares, which also increased the trading volume and price. In doing so, the stocks he would recommend would seem more attractive to potential investors when he made his public announcement.
Beck will then tweet his stock pick alert, and will continue to tweet recommendations and emails to followers on his newsletter. But the SEC claimed that when the stock price rose (after Beck emailed his “TeamBillionaire” recipients or a stock pick alert on Twitter), he would sell the stock he held, or sell the stock to his mother. will be kept in the accounts. ,
“None of Beck’s recommendations disclosed that Beck was planning to either sell the stock or actually sell the stock while he was recommending that others buy it,” the SEC complaint reads.
As of press time, Beck and the lawyers representing him could not be reached for comment.
The SEC wants a permanent injunction and a penny stock bar against Beck, with prejudice interest against both Beck and his mother, as well as civil penalties.