The Securities and Exchange Commission (SEC) in the US has charged Indian-American Milan Vinod Patel for spreading more than 100 false rumours about public companies to generate over $1 million in illicit trading profits.
Patel received rumours that he knew to be false from his accomplices about purported market-moving events, such as corporate mergers or acquisitions, involving publicly-traded companies, the SEC said in its complaint.
He then spread the rumours to his contacts at financial news services, chat rooms, and message boards.
"Today we charged Milan Vinod Patel for his central role in a multi-million dollar scheme to spread and trade on more than 100 false rumours about public companies," the SEC tweeted.
Patel also disseminated the rumours to Mark Melnick, a host of a stock trading webcast, who shared them with his webcast subscribers.
The circulation of more than 100 rumours between December 2017 and January 2020 caused the prices of the subject companies' securities to rise temporarily.
This allowed Patel to sell his holdings in such securities and generate more than $1 million in illicit trading profits.
The US District Court for the Northern District of Georgia, charged Patel with violating Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.
The SEC had previously charged Barton Ross, Mark Melnick, Anthony Salandra, and Charles Parrino for their roles in this scheme.