Home / General / “Craig’s on the S-List” or “How To Prepare For a Social Media Meltdown”

“Craig’s on the S-List” or “How To Prepare For a Social Media Meltdown”

Nov 9, 2015 | General

“Well, we are against fraud aren’t we?” — U.S. Securities and Exchange Commissioner Sumner Pike, in 1933

Whether you’re publicly- or privately-owned, there’s always a chance that someone — a competitor, a disgruntled ex-employee, or even some stock speculator — is scheming a way to get rich at your company’s or investors’ expense. A recent Securities and Exchange Commission filing against a Scottish trader accuses James Alan Craig of Tweeting false information, causing two different stock prices to plummet and causing their respective investors an estimated collective $1.5 million.   social media

I discussed the Ashley Madison and Target hacks over the summer, and this is yet another example of someone aiming at a business’ wallet using digital technology and this time, lies.   

The Crime

Last week, the SEC filed securities fraud charges against James Alan Craig, whose social media hoaxes in 2013 caused sharp drops in the stock prices of two securities research firms and triggered a trading halt in one of them.

According to a news release issued by the SEC, Craig bought and sold shares of both firms on each occasion, “in a largely unsuccessful effort to profit from the sharp price swings.”

The SEC’s investigation also determined that Craig later used aliases to tweet that it would be difficult for the SEC to determine who sent the false tweets “because real names weren’t used.”

The Violation

The SEC’s complaint, filed in the Northern District of California, charges that Craig committed securities fraud in violation of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5, which states:

It shall be unlawful for any person, directly or indirectly, by the use of any means or instrumentality of interstate commerce, or of the mails or of any facility of any national securities exchange,

(a) To employ any device, scheme, or artifice to defraud,

(b) To make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading, or

(c) To engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person, in connection with the purchase or sale of any security.

The complaint seeks a permanent injunction against future violations, disgorgement, and a monetary penalty from Craig.

To invoke Rule 10-b5, intention must be proved. This guy knew he was doing something illegal and publicly taunted the SEC about how he’d get away with it — all without speaking a word. Seems pretty intentional to me.

The Impact

Business owners and executives should be aware of this development, and should know some ways to protect against similarly hard-to-prove actions.

Put your name on it. Do as former Jets Head Coach Herm Edwards would advise. Purchase and reserve specific domain names, Twitter accounts, and social media pages to clearly announce your presence.

If you operate The 123 Company, buy the domain for,, and even, etc. You don’t have to maintain all of them — just have the extra ones redirect to your official home page. For Twitter handles, do the same, maybe even add a “TheReal” or “Official” as a prefix. Pronounce them clearly on your company’s home page and even your business card, if need be. This sends the message to potential and current clients that you have taken steps to prevent fraud and should provide some reassurance to both of you. Cybersquatting is illegal but for an extra few bucks a year, register the domains to protect against that, too. All this preparation should also repel would-be wrongdoers.

Keep it official. Don’t let anyone other than your marketing/social media group operate your cyber campaigns or speak for the company. Even if your employees have the best of intentions, they could accidentally leak information or slander a competitor, which could damage the company’s revenues and reputation. If these sorts of details are not covered in your hiring contracts, then it’s time for an update.

Do your research. The SEC has issued an Investor Alert titled Social Media and Investing – Stock Rumors prepared by the Office of Investor Education and Advocacy. The alert aims to warn investors about fraudsters who may attempt to manipulate share prices by using social media to spread false or misleading information about stocks, and provides tips for checking for red flags of investment fraud. Your marketing/social media specialists should be subscribed to their newsletters to stay informed about new laws and updates.  It also helps if your specialists sweep the web regularly for claims about or against your company.

Best Reaction Practices

If you find that your business or entity is already a victim of falsehoods, you have to act like a professional and have a plan in place.  Here are some suggestions:

  • Get your legal team on the phone immediately and strategize.  Is this a cataclysm or a momentary setback? Even if it’s the latter, act as if it’s the former.     
  • Gather every scrap of evidence that you can find. Print it. Then digitize it.  It sounds a little backward, maybe, but keeping it all the damning evidence in one spot and making it accessible will be a focal point for any litigation you pursue.
  • Contact the SEC. This is what they are there for. As Mr. Burns would say: “Release the hounds.”
  • Alert your investors and subscribers. Issue a statement detailing what occurred and lace it with facts. A quote from the senior executive or owner will show that he/she is aware of the severity of things and is making this a priority.   
  • Don’t let them see you sweat. Show whomever is watching that you are in control:  You’ve isolated the problems, addressed them, and are taking steps to correct them, because…
  • Obtaining justice will not happen overnight. Craig made his tweets and taunts in 2013 and the criminal charges against him are first filed now. Investigations involving E-Discovery take time — and that could be years.    

Laws pertaining to the relationship between the Internet and business will always be updating and evolving. When the Securities Exchange Act of 1934 was passed, it’s safe to assume its authors weren’t preemptively protecting from people creating chaos using only their thumbs on handheld phones. Thankfully, this law was in place. A lie in the age of the bullhorn is the same as a lie in the age of the Internet. Proving someone broke it — especially knowingly — it is a lot harder now than it was 80 years ago, though.  

With each new social media platform there will be someone to test its legal waters, intentionally or unintentionally.

Talk to us about additional ways to protect against false statements and other deceptive practices that will impact your business.



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I formerly worked as a satellite employee from my home state of New Jersey. I ended my employment with my former employer in 2016. In 2018, I was sued by my former employer for $1.1 million in Illinois State Court. I was referred to Brinen & Associates, LLC by a friend who is a client of the firm. Brinen & Associates, LLC came highly recommended. I contacted Joshua Brinen and then had a consultation at his office with his colleague Mark White. Together, Messrs. Brinen and White explained my options...

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