Twitter and Facebook are the Boiler Rooms of the Social Media Age
by Steve Berman08/20/2015
In a little-known but taut thriller called “The Prime Gig,” Vince Vaughn plays Pendleton “Penny” Wise – a smooth-talking telemarketing scam artist who uses his silver tongue to bilk little old ladies out of their Social Security checks.
The movie is a decade old now, but its lessons are just as vital today as they were when the movie first debuted. Armed with a headset, a telephone line and just a few minutes of your time, Vaughn does plenty of damage engaging in small-time investment fraud.
In today’s world of instantaneous communication, those engaged in securities fraud don’t even need a telephone. In fact, they don’t even have to open their mouths. All they need is a computer, an Internet connection, a Twitter or Facebook account and the ability to squeeze their financial schemes into 140 characters.
That’s right. One hundred and forty characters. That’s all it takes today to commit investment fraud. Case in point – USA v. Susser et. al. in the U.S. District Court for the Southern District of New York.
According to a Reuters report, Facebook and Twitter – the two most popular social networking sites in the world – were used to tout penny stocks in a classic “pump and dump” securities scheme. Basically, the perpetrators are accused of inflating the share prices of four penny stocks by posting a series of Web links on Twitter and Facebook in an enterprise that took in more than $3 million in illegal gains.
How much did investors lose? Reuters reports shareholder losses amounted to more than $7 million.
Here at Hagens Berman, we see securities fraud in all its ugliest guises on a regular basis and the victims run the gamut. Sometimes, the victims are little old ladies like the ones swindled by Vaughn in “The Prime Gig.” Other times, the victims are large institutional investors such as public pension funds in cases that encompass hundreds of millions of dollars in financial losses.
As fraud attorneys, it’s our job to protect investor rights and help victims of stock fraud recover as high a proportion of their losses as possible, and we have a solid track record. We’ve helped recover hundreds of millions on behalf of employees who saw their pensions wiped out at companies like Enron and Washington Mutual.
In the latter two cases, arcane and complex financial instruments were manipulated over a period of years, resulting in massive investment losses for countless individuals. What investors need to remember, however, is it doesn’t always take much financial know-how or planning to trick people out of their money.
Sometimes, all it takes is 140 characters.