Mark Melnick charged with spreading 100+ false rumors on podcast
The pump-and-dump scheme lasted for two years and included trading on 100 false rumors, generating more than $374,000 in illicit profits.
The Securities and Exchange Commission has charged Mark Melnick with spreading more than 100 false rumors about public companies in order to generate illicit profits.
Mark Melnick is the host of a stock trading webcast. He allegedly received advance notice of companies about which another scheme participant planned to spread false rumors, and then shared the companies’ names with subscribers to his online trading room.
In this scheme, which also led to charges against Barton Ross, Melnick advised the subscribers that he had taken positions in the companies, while other scheme participants also spread the false rumors through real-time financial news services, financial chat rooms, and message boards.
The pump-and-dump scheme lasted for two years and included trading on 100 false rumors, generating more than $374,000 in illicit profits. The other scheme participants also traded around the false rumors, generating significant profits.
Kristina Littman, Chief of the Enforcement Division’s Cyber Unit, said: “Melnick was allegedly engaged in an extensive market manipulation scheme to create and spread over 100 false rumors about publicly traded companies. We will continue to work aggressively with our law enforcement partners to detect and punish schemes that undermine the integrity of our markets.”
Melnick has agreed to cooperate with the Enforcement Division. He will be ordered to pay disgorgement of $374,835 plus prejudgment interest and a civil penalty in an amount to be determined at a later date.
Melnick, who has also agreed to a penny stock bar and to be barred from the securities industry, has pleaded guilty to related criminal charges in a parallel action.
The SEC’s statement doesn’t mention if any whistleblower collaborated with the agency to bring charges against the schemers, but the Whistleblower Program has become a key tool for the regulator’s enforcement actions.
The program has recently surpassed the $1 billion mark in awards after a $110 million prize to a whistleblower last week, which stands as the second-highest award in the program’s history, following a previous $114 million prize issued in October 2020.
Whistleblower awards can range from 10-30% of the money collected when the monetary sanctions exceed $1 million. The SEC protects the confidentiality of whistleblowers and does not disclose any information that could reveal a whistleblower’s identity. The program issued its first award in 2012 and, less than ten years later, it has reached the $1 billion milestone.
Last week, the SEC barred two individuals from the SEC’s whistleblower award program for having filed hundreds of frivolous award applications.
The filing of these applications consumed considerable staff time and resources, hindered the efficient operation of the program, and did not contribute to any successful enforcement action.
The individuals were repeatedly warned to stop submitting the abusive filings but refused to do so. This led the SEC to take action against them in the form of a ban from the award program.