SEC Charges Additional Social Media Influencer in Stock Manipulation Scheme
On May 25, 2023, the Securities and Exchange Commission brought partially settled charges against Francis Sabo (also known as "Ricky Bobby") in a $100 million securities fraud scheme in which Sabo, along with several other defendants previously charged by the Commission in December 2022, used social media platforms to manipulate exchange-traded stocks.
According to the SEC, since at least January 2020, Sabo promoted himself as a trustworthy stock-picking guru and cultivated a substantial following in the Atlas Trading forum on Discord, a free online forum purporting to provide educational content about trading and securities markets. The SEC contends that Sabo, like the previously charged defendants, purchased certain stocks and then encouraged his substantial social media following to buy those selected stocks by, among other things, posting price targets or indicating he was buying, holding, or adding to his stock positions. However, as the complaint alleges, when share prices and/or trading volumes rose in the promoted securities, Sabo regularly sold his shares without ever having disclosed his plans to dump the securities while he was promoting them. The SEC further alleges that from at least January 2020 through December 2022, Sabo made over $1 million from his participation in the stock manipulation scheme.
Sabo is charged with violating the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder and Section 17(a) of the Securities Act of 1933. The SEC's complaint, filed in the U.S. District Court for the Southern District of Texas, seeks a permanent injunction, disgorgement, prejudgment interest, and civil penalties. To settle the Commission's charges, Sabo has consented to be enjoined from future violations of the charged provisions of the federal securities laws, with the amount of monetary remedies to be determined at a later date. The settlement is subject to court approval. Criminal charges against Sabo were also filed in a parallel action brought by the Criminal Fraud Section of the U.S. Department of Justice and the U.S. Attorney's Office for the Southern District of Texas.
The SEC's investigation, which is ongoing, is being handled by Andrew Palid, David Scheffler, and Michele T. Perillo of the Market Abuse Unit (MAU) in the Boston Regional Office, with assistance from Darren Boerner of the MAU, Stuart Jackson, Kathryn Schumann-foster and Marina Martynova of the Division of Risk and Economic Analysis (DERA), and Howard Kaplan of the Office of Investigative and Market Analytics. The investigation has been supervised by MAU Chief Joseph G. Sansone. The investigation resulted from a referral from the Division of Examinations by Mark A. Gera, John Kachmor, Nitish Bahadur, and Raymond Tan in the Boston Regional Office. The litigation will be led by David D'Addio and Amy Burkart of the Boston Regional Office.
The SEC appreciates the assistance of the Criminal Fraud Section of the U.S. Department of Justice, the U.S. Attorney's Office for the Southern District of Texas, the Federal Bureau of Investigation, and the Financial Industry Regulatory Authority.
Read the original litigation release from the U.S. Securities and Exchange Commission here.Click Here to Follow SEC Alerts