Photo: Flickr / tibchris
Incredible.Some twin brothers were charged by the SEC today for allegedly defrauding around 75,000 investors with a pump-and-dump scheme that used a fake “stock picking robot.”
Apparently this robot — which they set up when they were just 16 years old — was supposed to find penny stocks that were set to double in price. The SEC claims in reality the brothers were actually touting stocks they were being paid to promote.
From the SEC’s release:
The SEC alleges that Alexander John Hunter and Thomas Edward Hunter were just 16 years old when they set their fraud in motion beginning in 2007. They disseminated e-mail newsletters through a pair of websites they created to tout stocks selected by the robot – which they described as a highly sophisticated computer trading program that was the product of extensive research and development. Their claims were persuasive as the Hunters received at least $1.2 million from investors primarily in the U.S. who paid $47 apiece for annual newsletter subscriptions. Some investors paid an additional fee for the “home version” of the robot software.
In reality, the SEC alleges that the Hunters used a third website to offer their services as stock promoters, claiming that they could “rocket” a stock’s price and increase its volume by sending out newsletters. The Hunters were consequently paid at least $1.865 million in fees from known or suspected stock promoters, and they did not disclose to their newsletter followers the conflicting relationship between their two businesses.
“The Hunters used the anonymity of the Internet and the promise of easy riches to prey on investors,” said Thomas A. Sporkin, Chief of the SEC’s Office of Market Intelligence. “While touting their supposed breakthrough investment technology on two websites, the Hunters were racking up fees as stock promoters through a third.”