A man from Cumming has been sentenced to 18-months in prison after pleading guilty to a market-manipulation scheme.
49-year-old Milan Patel and four other conspirators; two from Florida, one from Atlanta, and one from New Jersey, have all been sentenced.
That’s according to the acting United States Attorney for the Northern District of Georgia Richard Moultrie, Jr.’s office.
The defendants reportedly executed over 500 trades and made over $2.6-million using the fraudulent scheme.
The scheme reportedly lasted years and saw Patel and his co-conspirators disseminate false rumors about publicly traded companies before profitably trading on those rumors by buying and selling short-term call options.
“The defendants used their financial acumen to manipulate the securities markets by releasing false information about publicly traded companies,” Moultrie said. “Our office is committed to working with our law enforcement partners to investigate and prosecute all forms of securities fraud.”
Call options are basically contracts that give the holder the right to buy shares of the underlying stock at a set price per share on or before a set future date.
Three of the co-conspirators were formerly registered brokers with the Financial Industry Regulatory Authority (FINRA) and were responsible for drafting the rumors, according to Moultrie’s office.
Another conspirator was a day trader who would reportedly provide evaluations as to whether a false rumor would be successful or not.
Patel was responsible for spreading the rumor on Trillian, an instant-messaging application.
Those rumors would then spread to market subscription services as well as Twitter (now known as X) accounts.
Before Patel spread the rumors, the co-conspirators would acquire a position in the companies that were subjects of the rumors.
“The co-conspirators purchased short-term call options often mere seconds before Patel disseminated the rumor,” Moultrie’s office said.
Patel was convicted in August of last year after pleading guilty and was also ordered to pay a $10,000 fine.
The Federal Bureau of Investigation (FBI) and the Securities and Exchange Commission (SEC) investigated the case, and the SEC is also investigating potential civil violations.
