The brazen head of a New York Metropolis taxi medallion lender was secretly paying for affordable information about his troubled firm to boost its share worth, in response to a fraud grievance from the Securities and Change Fee on Wednesday.
Andrew Murstein, the 57-year-old president and chief working officer of Manhattan-based Medallion Monetary Corp., allegedly got here up with the plan when the rise of Uber and Lyft led buyers to pissed off with taxi-related shares.
To vary the minds of buyers, Murstein has hatched a plan, in response to the SEC: to rent media strategists to jot down articles that enhance his enterprise with out revealing that they’re being paid by Murstein. The strategists then used faux names to position no less than 50 articles about Medallion Monetary on websites like In search of Alpha, HuffPost and Crains New York Enterprise from 2014 to 2017, in response to the lawsuit.
“Murstein reportedly paid for greater than 50 articles and a whole bunch of optimistic feedback that have been really paid ads positioned on the Web to mislead buyers in regards to the worth of Medallion inventory,” mentioned Richard Greatest , SEC New York Regional Director.
Medallion Monetary helped revolutionize the taxi business by offering dangerous Medallion loans to low-income drivers.Bloomberg by way of Getty Photos
Murstein additionally put stress on accountants to provide Medallion Monetary the next ranking than it deserved, the SEC mentioned.
Medallion Monetary shares have been down 27 % on Wednesday, to $ 6.21.
Murstein’s firm, which went public in 1996 and helped revolutionize the taxi business by offering dangerous medallion loans to low-income drivers, had a share worth of over $ 17 in 2013.
However as New Yorkers began flocking to Uber and Lyft, the medallions – which give holders the best to drive yellow cabs round city – fell in worth. Traders then received mad at Medallion Monetary’s shares, delivery them down to only $ 2 at a time in 2017.
In a press release to The Publish, a spokesman for Medallion Monetary mentioned the corporate plans to “vigorously defend itself towards the SEC’s unsubstantiated allegations and is assured that we are going to be totally confirmed.”
Medallion Monetary denied breaking the regulation.Corbis by way of Getty Photos
The spokesman didn’t deny that Murstein had secretly paid for articles, however mentioned the conduct was in “good religion”.
“The actions in query passed off 5 or extra years in the past when brief sellers ran an internet marketing campaign to decrease the corporate’s inventory worth for private achieve by disseminating deceptive and derogatory data and misrepresenting its enterprise,” the spokesman mentioned.
“Medallion has solely sought to supply the market with an intensive understanding of the corporate’s monetary situation and prospects, in addition to an applicable and clear evaluation of Medallion Financial institution and its different property.”
“Not one of the allegations within the SEC grievance result in a safety breach,” added the spokesman.