Los Angeles: It sounded far-fetched, a "stock-picking robot" that could identify penny stocks poised to double in price. Turns out, it was.
Federal regulators filed a civil complaint Friday against 20-year-old twin brothers in Britain, claiming they duped 75,000 people — mostly Americans — into paying $47 (Dh172) each to get stock tips from a robot dubbed Marl.
They told investors Marl ran on a computer code written partly by a one-time Goldman Sachs programmer who didn't exist, the Securities and Exchange Commission said. Alexander John Hunter and Thomas Edward Hunter launched the scheme in 2007, when they were just 16, and took in at least $1.2 million from gullible investors, the SEC said.
And that was just the half of it, according to the federal complaint. The brothers also are accused of running a related con offering their services as stock promoters, claiming they could "rocket" a stock's price by touting it to subscribers in their newsletter.
New twist
The SEC said the Hunters were paid at least $1.9 million by "known or suspected stock promoters" to push their shares. This they did — to the clients who had signed up for Marl the robot's stock-picking predictions, the agency said. A lawyer for the Hunters did not return a telephone call seeking comment. Touting a robot as an expert in deciphering Wall Street is a new twist on the "pump and dump" scam regulators have been cracking down on for decades. These involve fraudsters promoting shares of small, thinly traded companies as the next hot investment in the hopes of artificially inflating the stock's value.
When the price shoots up, the perpetrators dump their own shares at a big profit. This kind of fraud used to be perpetrated by cold calls and mass mailings. Today, it has moved to the internet, and that means tech-savvy teenagers can pull off scams once reserved for smooth-talking con men, said Jacob Frenkel, an attorney in Maryland. The SEC is suing the Hunters for ill-gotten gains and unspecified financial penalties.
— Los Angeles Times
