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Regulatory Sanctions

Pair Manipulates Fitbit Stock Through Fake Tender Offer

July 12, 2018

by Howard Haykin


A 30-year old engineer screwed up his life, and for what? A $13,008 payoff!


The SEC filed fraud charges against a 30-something senior marine engineer from Virginia Beach, VA, in connection with a scheme to manipulate the price of Fitbit securities through false regulatory filings.   


SEC FINDINGS.    The individual purchased Fitbit call options just minutes before he and a co-conspirator filed a fake tender offer on the SEC's EDGAR system purporting to acquire Fitbit's shares at a substantial premium.


Last year, the SEC charged the co-conspirator – a 25-year old mechanical engineer, also from Virginia Beach, VA - and he recently was sentenced to prison in a parallel criminal case.


The false tender offer was filed on November 9, 2016, in the name of ABM Capital LTD, a nonexistent company for which the defendants created an EDGAR account. The defendant employed several deceptive techniques to conceal his identity and true location, including using someone else's name to create an email account and disguising the internet protocol ("IP") address used to obtain EDGAR filing credentials and make the false filing to conduct the scheme. In preparation for the scheme, the co-conspirators researched 2 prior EDGAR manipulation cases filed by the Commission.


The tender offer became publicly available one day later, on November 10, 2016, and within 15 minutes the defendant sold all of his options - reaping a 350% profit of $13,008.   


[For further details, click on …  SEC Complaint]