Scottish Man Indicted for using bogus tweets to earn in illegal stock trading

James Alan Craig, of Dunragit, Scotland has been indicted by a federal grand jury in San Francisco Wednesday for allegedly using Twitter to profit from illegal trading.

In a report by the Business Insider, the Securities and Exchange Commission said Craig created Twitter accounts that replicate influential securities research firms. He then used those accounts to send bogus information to bring down stock prices. In 2013, he sent tweets against Sarepta Therapeutics, saying it was under investigation. This sent the stock prices of the company down 16 percent. He did the same thing with smartphone tech provider Audience. The company's stock went down and stock was stopped.

Reuters reported that the US Department of Justice charged 62-year-old Craig with one count of securities fraud. The US Securities and Exchange Commission filed similar charges against the Scot in a related civil case. These charges are the latest efforts by US authorities against stock market fraud through social media. At present, Craig's whereabouts is not yet determined.

According to San Jose Mercury News, Acting US Attorney Brian Stretch said, "This prosecution makes clear that we will find and prosecute those who commit fraud on our stock exchanges, by any means, no matter where they reside." The Twitter account that the fraudster set up in 2013 was named "@Mudd1Waters" and "@citronresearc," as well as using the logos of both companies.

After using the accounts to drive down stock prices of Audience and Sarepta, Craig bought their shares at a depressed price through his girlfriend's brokerage account. According to the Justice Departments, shareholders lost $1.6 million due to the fraud. At the time the bogus tweets came out, Muddy Waters and Citron, run by investor Andrew Left, said the tweets were not theirs.

Craig must be extradited to the United States and face the charges, which could put him in federal prison for several years.