SEC Charges Additional Social Media Influencer in Stock Manipulation Scheme

The Securities and Exchange Commission (SEC) reported on May 25, 2023, that it had initiated a process to resolve charges against Francis Sabo (also known as “Ricky Bobby”), pertaining to his alleged role in a $100 million securities fraud scheme. Sabo and other individuals, previously charged by the SEC in December 2022, are alleged to have exploited social media platforms to manipulate exchange-traded stocks.

The SEC outlines that starting in January 2020, Sabo portrayed himself as a reliable stock selection expert and garnered a significant following on the Atlas Trading forum within Discord, a free online platform claiming to offer educational resources on trading and securities markets. The SEC claims that Sabo, like the individuals charged earlier, acquired specific stocks and subsequently urged his considerable social media followers to purchase those stocks by posting price targets or suggesting that he was buying, retaining, or increasing his stock holdings. As per the complaint, Sabo regularly sold his shares when the prices or trading volumes of the promoted securities rose, despite never having disclosed his intention to sell the securities while promoting them. The SEC also alleges that Sabo earned over $1 million from his involvement in the stock manipulation scheme between January 2020 and December 2022.

Sabo has been charged with breaching the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, as well as Section 17(a) of the Securities Act of 1933. The SEC’s complaint, lodged in the U.S. District Court for the Southern District of Texas, seeks a permanent injunction, disgorgement, prejudgment interest, and civil penalties. Sabo has agreed to a settlement to be prohibited from future violations of the charged provisions of the federal securities laws, with the amount of monetary remedies to be determined in the future. This settlement is pending court approval. The Criminal Fraud Section of the U.S. Department of Justice and the U.S. Attorney’s Office for the Southern District of Texas have also filed criminal charges against Sabo in a parallel proceeding.

The ongoing SEC investigation is being managed by Andrew Palid, David Scheffler, and Michele T. Perillo from the Market Abuse Unit (MAU) in the Boston Regional Office, with support from Darren Boerner of the MAU, Stuart Jackson, Kathryn Schumann-Foster and Marina Martynova of the Division of Risk and Economic Analysis (DERA), and Howard Kaplan of the Office of Investigative and Market Analytics. The investigation has been overseen by MAU Chief Joseph G. Sansone and was initiated due to a referral from the Division of Examinations by Mark A. Gera, John Kachmor, Nitish Bahadur, and Raymond Tan in the Boston Regional Office. David D’Addio and Amy Burkart of the Boston Regional Office will be directing the litigation.

The SEC has expressed its gratitude for the assistance of the Criminal Fraud Section of the U.S. Department of Justice, the U.S. Attorney’s Office for the Southern District of Texas, the Federal Bureau of Investigation, and the Financial Industry Regulatory Authority.