Key Points:
Seven social media influencers lost their bid to dismiss criminal securities fraud charges in a $114 million meme stock scheme. The judge rules that predictions or opinions made by influencers with malicious intent can be considered criminal acts, emphasizing that the First Amendment does not protect fraudulent activities. Actions on social media leave a trail of evidence, potentially leading to serious legal consequences.
A federal court in Houston has dealt a blow to seven social media influencers accused of orchestrating a massive $114 million “pump and dump” scheme.
The influencers sought to have criminal securities fraud charges against them dismissed, but their bid was unsuccessful.
Former SEC Internet Enforcement Director John Reed Stark, known for his insights on such cases, reported on the development. According to Stark, the influencers had argued that their predictions and opinions on meme stocks were not criminal acts.
However, Judge Andrew S. Hanen disagreed, stating that predictions or opinions made by meme stock promoters with malicious intent to further a conspiracy could indeed constitute crimes.
Judge Hanen emphasized that the First Amendment does not shield fraudulent activities. If the government‘s allegations hold true, the court believes that the defendant’s statements were made as part of a scheme to manipulate stock prices to their advantage, potentially harming the investing public. Such conduct, if proven, is not protected speech.
This ruling sends a clear message to stock and crypto promoters using social media to attract investors. Their actions are under scrutiny, leaving a trail of evidence that may lead to serious legal consequences.
While the influencers bid to dismiss charges has failed, the legal proceedings will continue, shedding light on the alleged $114 million pump-and-dump scheme.