SEC Accuses NY Lender of Taxi Drivers of Fraud | Business and financial news

Medallion shares took a dive after U.S. regulators accused the lender of taxi drivers in New York City of pumping the stock price by flooding media websites with fake news articles.

The shares in Medallion Financial Corp. was halted Wednesday after U.S. regulators accused the New York-based lender of taxi drivers of illegally raising stock prices amid intense competition from Uber Technologies Inc. and Lyft Inc.

The Securities and Exchange Commission claimed that Medallion, after a streak of banner years, declined as the popularity of carpooling apps caused the value of taxi medallions used as collateral for loans to decline. When the company’s stock fell since 2013, it tried to drown out shorts sellers by flooding media websites with fake news articles, the SEC said in a lawsuit filed in federal court.

Medallion shares were stopped on Wednesday after the stock fell more than 50% to $ 3.94. They then resumed trading and reduced losses to around 33% from 1 p.m. 10:35 in New York. The company traded almost as high as $ 18 per share eight years ago.

The regulator said the company’s president, Andrew Murstein, paid a PR firm to produce hundreds of posts – often under pseudonyms – that proclaimed Medallion. Articles that were designed to look like they came from actual investors who were positive about the company appeared on sites like the Huffington Post, Seeking Alpha and

The regulator also accused Murstein of pressuring investment banks to inflate the valuation of the company’s Medallion Bank unit. The move, which was not disclosed to investors, resulted in the subsidiary’s fair value jumping to $ 280 million at the end of 2016, from $ 166 million just two quarters earlier, even as the price of medallions fell, the SEC said.

“Companies can also not shop for higher valuations when there is no evidence to support them,” Richard Best, director of the SEC’s New York Regional Office, said in a statement.

The SEC said it is suing to force the company to repay investors. The regulator also seeks to fine the company and prevent Murstein from serving as an officer or director of a listed company for a period of time.

“We intend to defend ourselves vigorously against the SEC’s unfounded allegations,” Medallion said in a statement. “None of the allegations in the SEC complaint give rise to a breach of securities, and we are confident that the full record will show that Medallion Financial Corp. and Andrew Murstein complied with the law.”

In its 2020 annual report, Medallion said it is shifting away from the taxi industry to focus on consumer lending. In addition to financing cab medals, the company says it offers loans for home improvements, commercial businesses and recreational vehicle purchases.


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