SEC Charges Fourth Participant in Market Manipulation Scheme
Litigation Release No. 25528 / September 28, 2022
Securities and Exchange Commission v. Charles Parrino, Civil Action No. 1:22-cv-03888 (N.D. Ga. filed September 27, 2022)
The Securities and Exchange Commission announced charges against Charles Parrino for his role in a market manipulation scheme in which he and several other individuals created false rumors about public companies in order to profitably trade around the temporary price increases caused by the publication of the rumors. The SEC previously charged Barton Ross, Mark Melnick, and Anthony Salandra for their roles in this scheme.
According to the complaint, filed in federal district court in Atlanta, Parrino, Ross, and Salandra created false rumors about purported market-moving events, such as corporate mergers or acquisitions, involving publicly-traded companies. As alleged, the false rumors were then shared with Melnick and another individual who disseminated the false rumors through real-time financial news services, financial chat rooms, and message boards, causing the prices of the subject companies' securities to rise temporarily. Between December 2017 and January 2020, Parrino allegedly was involved in the creation of and traded around at least 138 false rumors, generating over $982,000 in illicit profits. The other scheme participants also allegedly traded around the false rumors, generating significant profits.
The SEC's complaint charges Parrino with violating the antifraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. Parrino has consented to the entry of a judgment which, subject to court approval, will permanently enjoin him from violating the charged provisions and require him to pay disgorgement of $982,690, plus prejudgment interest, and a civil penalty in an amount to be determined at a later date.
In a parallel action, the U.S. Attorney's Office for the Northern District of Georgia today announced that Parrino pleaded guilty to related criminal charges.
The SEC's investigation, which is ongoing, is being conducted by Martin Zerwitz of the Enforcement Division's Crypto Asset and Cyber Unit and Jonathan Austin. The investigation is supervised by Deborah Tarasevich, Carolyn M. Welshhans, Acting Chief of the Crypto Asset and Cyber Unit, and Joseph G. Sansone, Chief of the Market Abuse Unit. The SEC appreciates the assistance of the U.S. Attorney's Office for the Northern District of Georgia and the Federal Bureau of Investigation.