Twitter User ‘Alexander Delarge’ Charged for Hyping Penny Stocks
(Bloomberg) -- The man behind a popular Twitter account that promoted penny stocks was criminally charged for touting securities while simultaneously dumping shares, the latest sign that authorities are setting their sites on the social-media frenzy that’s invaded U.S. equity markets.
Steven Gallagher, 50, was taken into custody in Ohio Tuesday for running a pump-and-dump scheme that netted him more than $1 million through the Twitter handle, @AlexDelarge6553, according to a criminal complaint filed in federal court in Manhattan. Gallagher, who has touted at least 60 companies since the end of 2019, continued the manipulative conduct even after his brokerage firm closed his account, the Securities and Exchange Commission alleged in a parallel civil case.
Gallagher’s alias, Alexander Delarge, is the name of the sociopathic gang leader who Malcolm McDowell played in the 1971 film “A Clockwork Orange.” The 655321 figure Gallagher includes in his Twitter handle was the prison number for McDowell’s character in the movie. It wasn’t immediately clear whether Gallagher had retained a lawyer to respond to the government’s charges.
This year’s wild trading of meme stocks has been a focus for the SEC, which wants to make sure the army of retail investors who’ve taken to buying and selling shares aren’t getting fleeced. A particular target has been penny stocks. In February, the regulator suspended 15 stocks from trading due to concerns that their prices were being artificially inflated through social media by scammers.
Gallagher traded over-the-counter stocks, including SpectraScience Inc, SPO Global Inc. and Alpine Holdings Inc.. Prosecutors say he amassed large positions, took to Twitter to promote the companies and then secretly sold his positions as other investors piled in. All the while, he publicly claimed he was in for the long haul.
In the SpectraScience trade, for example, Gallagher allegedly coordinated with other traders to buy shares in the defunct company, which hasn’t filed SEC financial statements since 2017. Gallagher acquired more than 20 million shares of the penny stock and touted it in a series of colorful tweets, showing purported screenshots of his brokerage orders, according to the criminal complaint filed by Manhattan federal prosecutors. He sold while continuing to promote the shares, writing: “Haven’t sold a share yet!”
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