The quest of any insider trader is to get a stock bet in place before a big announcement is made. Robert W. Murray thought he could just make his own announcement and sell out of his trade. The target was Fitbit.
This case caught my attention because of the yelling about “fake news” and Fitbit. I became a fan of the Fitbit products a few years ago when I wanted to lose some weight. I managed to drop 25 pounds using my Fitbit (and watching what I ate and exercising more).
Mr. Murray had no inside information, so he decided he could make some money by manufacturing his own announcement. He did some research and thought he could put a fake filing on EDGAR, the SEC filing system. According to the SEC complaint, Mr. Murray figured out how to do a fake filing by research at least two prior EDGAR manipulation cases: the 2015 Nedko Nedev Case and the 2016 Nauman Aly case.
Mr. Murray bought some out-of-the-money call option cheap the filed a fake tender offer for Fitbit, Inc. on EDGAR. It worked. The stock price spiked by 10% on news of the tender offer. The stock came back down after Fitbit made an announcement that it had received no communications about a tender offer.
Mr. Murray had a great ROI on his call options of 351%. He did not have much money at risk. He only spent $887 on the options and realized a gain of $3,118.
Mr. Murray was able to disguise his IP address for his filing. However, he used his real email as a backup recovery email for the EDGAR account. He booked a hotel reservation using that account. There was a recovery email for the the first recovery email that tied back to Mr. Murray’s employer.
Assuming the facts in the complaints turn out to be true, Mr. Murray spent a lot of time and energy to create the fake steps and fake news for a $3200 profit. Looks like he is going to use all of that up in legal fees, and then a lot more to try to keep himself out of jail.
Sources:
One thought on “The One With the Fake Fitbit Steps and Fake News”