The Securities and Exchange Commission has charged Richard Karp, a trader from Fort Myers, Florida, with fraud relating to a fake press release the SEC says he issued in an effort to manipulate a company’s stock price. Karp allegedly released a false announcement from WCI Communities, Inc. to the media, which in turn caused the company’s stock price to soar. Karp allegedly gained thousands of dollars in profits relating to his scheme.
It is alleged that Karp actively traded WCI’s stock in hopes that a major shareholder would make a buyout offer. When that did not happen, Karp allegedly issued this false announcement claiming that WCI’s board of directors received a $220 million buyout offer.
The SEC alleges that the false press release was sent to media outlets in Southwest Florida as well as national outlets on July 19th. The information contained in the fake announcement was the allegedly reported by at least four Ft. Myers media outlets. The SEC says that following Monday, July 21, as result of this announcement, investors responded and the stock price increased dramatically.
The SEC states that all in all Karp made approximately $29,000 in illegal profits by selling his shares in pre-market trading on July 21. The SEC is seeking a permanent injunction against Karp, disgorgement of his ill-gotten gains with prejudgment interest, and a fine.
Jason Doss is the owner of The Doss Firm, LLC, an Atlanta-based law firm devoted to representing consumers across the country in a variety of areas including investment disputes and consumer class action litigation. Mr. Doss earned his J.D. from Florida State University in 2002 and his B.A. from the University of Florida in 1997.