July 11, 2018/US SEC
The Securities and Exchange Commission today filed fraud charges against a second defendant in connection with a scheme to manipulate the price of Fitbit securities through false regulatory filings.
According to the SEC’s complaint, Mark E. Burns purchased Fitbit call options just minutes before he and his co-conspirator, Robert W. Murray, filed a fake tender offer on the SEC’s EDGAR system purporting to acquire Fitbit’s shares at a substantial premium. The SEC charged Murray last year and he recently was sentenced to prison in a parallel criminal case. The false tender offer was made in the name of ABM Capital LTD – a nonexistent company for which the defendants created an EDGAR account. Fitbit’s stock price temporarily spiked when the tender offer became publicly available on Nov. 10, 2016, and Burns sold all of his options for a 350 percent profit of approximately $13,000.
“We allege that Burns and Murray tried to camouflage their identities and their affiliation with an EDGAR account by using disguised IP and e-mail addresses,” said Robert A. Cohen, Chief of the Cyber Unit. “Despite their sophisticated efforts to avoid detection, we stopped their alleged abuse of our filing system and charged them with being responsible for this manipulation.”
The SEC’s complaint charges Burns with violating antifraud provisions of the federal securities laws. Murray has agreed to settle the SEC’s charges against him. The settlement is subject to court approval.
The SEC’s investigation was conducted by David W. Snyder and Assunta Vivolo of the Cyber Unit, with the assistance of Patrick A. McCluskey of the Market Abuse Unit. The case was supervised by Joseph G. Sansone, Kelly L. Gibson, and Mr. Cohen. The litigation will be led by Jennifer C. Barry and Julia C. Green of the Philadelphia Regional Office. The SEC appreciates the assistance of the U.S. Attorney’s Office for the Southern District of New York and the U.S. Postal Inspection Service.