The Securities and Exchange Commission (SEC) has been focusing its attention on the use of social media as a tool for securities fraud, in the wake of the recent activity of “meme stocks” like GameStop (NYSE: GME), AMC Entertainment Holdings Inc. (NYSE: AMC) and Sundial Growers Inc. (NYSE: SNDL).
Recently the SEC filed a federal securities lawsuit against Andrew L. Fassari (SEC v. Andrew L. Fassari), who it alleges used various social media outlets to make false statements about Arcis Resources Corporation (ARCS), a company that had been defunct for years. The SEC charged Mr. Fassari with violating the antifraud provision of the federal securities laws, Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5, thereunder. Some of the specific allegations in the complaint include:
- “[Mr.] Fassari published numerous false and misleading posts on social media platforms about Arcis Resources Corporation (“ARCS”), a publicly traded company that has been defunct since at least 2016, while secretly trading the securities of ARCS in violation of the federal securities laws”;
- “[Mr.] Fassari purchased tens of millions of shares of ARCS, then deceptively spread false information about the company’s purportedly revived operations and imminent positive announcements on Twitter, among other social media platforms”; and
- “After the share price rose, [Mr.] Fassari secretly sold all of his shares, obtaining ill-gotten gains of over $929,000.”
The SEC seeks a permanent injunction, disgorgement, prejudgment interest, and a civil penalty from Mr. Fassari.
The SEC’s recent filing against Mr. Fassari is a clear indication that it will use all of its available tools to go after anyone who disrupts the integrity of the securities markets.
Whether you are the victim of social media driven securities fraud, the target/subject of a securities fraud investigation or have been charged with securities laws violations, The Law Office of Kevin J. Deloatch, Esq. can help. My Office has an extensive securities law practice and over 30 years of experience on Wall Street. Call today at (646) 792-2156 for a free consultation.