SEC Obtains Asset Freeze and Other Relief in Halting Penny Stock Scheme On Twitter

Litigation Release No. 25248 / October 26, 2021

Securities and Exchange Commission v. Steven M. Gallagher, a/k/a "Alexander Delarge 655321,", o. 1:21-civ-08739 (S.D.N.Y. filed October 26, 2021)

The Securities and Exchange Commission today announced that it filed an emergency action, and obtained an injunction and asset freeze, against Steven M. Gallagher for allegedly committing securities fraud through a long running scheme to manipulate stocks using Twitter.

The SEC's complaint alleges that, since at least December 2019, Gallagher used his Twitter handle, @AlexDelarge6553, to make thousands of tweets encouraging his numerous followers to buy stocks in which Gallagher had secretly amassed holdings. As alleged, Gallagher would then sell those stocks at inflated prices, while he continued to recommend others buy them-never disclosing that he was selling the stocks.

The SEC's complaint filed in the U.S. District Court for the Southern District of New York, charges Gallagher with violating the antifraud provisions of Section 17(a) of the Securities Act of 1933 and Sections 9(a)(2) and 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The complaint seeks emergency injunctive relief against Gallagher enjoining him from violations of the securities laws, freezing his assets and granting other relief, as well as seeking, among other relief, a permanent injunction, disgorgement, prejudgment interest, civil penalties, and the asset freeze granted by the Court.

The SEC's Office of Investor Education and Advocacy has previously alerted investors to the significant risks of making investment decisions and short-term trading based on social media and warned investors that aggressive stock promotion is a red flag of potential fraud.  The SEC encourages victims of the alleged fraud to contact AlexDelarge6553Victims@sec.gov.

The SEC's investigation, which is ongoing, was conducted by Thomas W. Peirce, Hane L. Kim, and Michael D. Paley under the supervision of Lara Shalov Mehraban. The SEC's litigation is being led by Kevin P. McGrath.

The SEC appreciates the assistance of the United States Attorney's Office for the Southern District of New York and Homeland Security Investigations.