Medallion Financial stock plunges toward 13-month low after SEC discloses fraud charges

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Shares of Medallion Financial Corp. plummeted at much as 58.6% intraday Wednesday, before paring losses to be down 27.4% in midday trading, after the Securities and Exchange Commission charged the New York-based bank holding company and its Chief Operating Officer Andrew Murstein for engaging in “fraudulent schemes” to boost its stock price. The SEC’s complaint alleges that from late 2014 through 2017, Medallion and Murstein engaged in “illegal touting” of its stock by paying media strategy company Ichabod’s Cranium Inc. to place positive stories about the company on various websites, including Huffington Post, Seeking Alpha and TheStreet.com. Ichabod’s Cranium and its owner Lawrence Meyers were also charged by the SEC. “With Murstein’s knowledge, Meyers and others created fake identities so their opinion pieces would appear credible to potential investors,” the SEC said in a statement. “The complaint further alleges that Medallion and Murstein fraudulently increased the carrying value of Medallion Bank (the Bank), a wholly owned subsidiary of Medallion, to offset losses relating to the taxicab medallion loans.” Medallion’s stock has still run up 25.2% this year, while the SPDR S&P Reginal Banking ETF had rallied 37.1% and the S&P 500 had advanced 27.4%.Market Pulse Stories are Rapid-fire, short news bursts on stocks and markets as they move. Visit MarketWatch.com for more information on this news.
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