The NYC taxi medallion baron paid for news to raise the stock price, the SEC claims

The brave boss of a New York taxi medal lender secretly paid for positive news stories about his struggling business in an attempt to raise the stock price, according to a complaint about fraud from the Securities and Exchange Commission on Wednesday.

Andrew Murstein, the 57-year-old president and CEO of Manhattan-based Medallion Financial Corp., allegedly came up with the scheme when the advent of Uber and Lyft made investors angry at taxi-related stocks.

In an attempt to change investors’ minds, the SEC says, Murstein hatched a plan: hire media strategists to write articles that boost his business without revealing that they were paid by Murstein. The strategists then used fake names to place at least 50 articles about Medallion Financial on sites including Seeking Alpha, HuffPost and Crain’s New York Business from 2014 to 2017, according to the complaint.

“Murstein has reportedly paid for more than 50 articles and hundreds of positive comments that were really paid ads placed across the web in an attempt to fool investors about the value of Medallion’s stock,” said SEC New York Regional Director Richard Best.

Medallion Financial helped revolutionize the taxi industry by providing risky medallion loans to low-income drivers.
Bloomberg via Getty Images

Murstein also pressured auditors to give Medallion Financial a higher valuation than it deserved, the SEC said.

Shares of Medallion Financial on Wednesday recently fell 27 percent to $ 6.21.

Murstein’s company, which was listed on the stock exchange in 1996 and helped revolutionize the taxi industry by providing risky medallion loans to low-income drivers, made its shares trade north of $ 17 as late as 2013.

But as New Yorkers began flocking to Uber and Lyft, the value of medallions – which give proprietors the right to drive yellow cabs in the city – fell into the tank. Investors then acquired Medallion Financials shares and sent them as low as $ 2 at some point in 2017.

In a statement to The Post, a spokesman for Medallion Financial said the company plans to “vigorously defend itself against the SEC’s unfounded allegations and is convinced that we will be fully justified.”

Medallion Financial refused to break the law.
Corbis via Getty Images

The spokesman did not deny that Murstein secretly paid for articles, but said the conduct was in “good faith”.

“The actions in question took place five or more years ago at a time when short sellers were engaged in an online campaign to push the company’s stock price down for their personal profits by spreading misleading and derogatory information and misrepresentation of its business,” the spokesman said.

“Medallion sought only to provide the market with an accurate understanding of the company’s financial position and prospects and an appropriate and transparent valuation of Medallion Bank and its other assets.”

“None of the allegations in the SEC complaint give rise to a breach of securities,” the spokesman added.


Leave a Comment