Tell Us If You Know More About These Financial Crimes Investigated By the SEC

The US Securities and Exchange Commission is a large beast, and inside its belly are tangles of every kind of financial mess that America can produce. Case in point: a cache of documents related to recent SEC Inspector General investigations that Motherboard obtained via a freedom of information request.

The reports are pretty heavily redacted, and are in some cases pretty vague. We’re publishing them in hopes that people who know more about these incidents will reach out. So, if you know more, contact us here:

One memorandum refers to an investigation of unknown parties that attempted to bolster an initial coin offering (ICO) scam. Interestingly, the scheme tried to impersonate SEC officials such as then-chairman Jay Clayton in 2018, who at the time made clear his belief that every ICO he'd seen had violated SEC rules because they were securities that had failed to register with the agency. In the end, the scheme failed to successfully target anyone, the agency exhausted all leads and recommended the case end there.

This hasn’t been the only attempt to impersonate Clayton, according to another document detailing an investigation into a group of Twitter accounts that allegedly impersonated the former chairman, and one called @DouchebagJaySEC.” The SEC was able to subpoena Twitter for an IP address, then Verizon for the subscriber information, leading to a visit to the home of a suspect in New Jersey. The investigation seems to have stalled and was eventually dropped as she refused to answer questions or let the OIG search her devices, and claimed her email account was hacked.

Another note from 2018 mentions a partnership between the SEC’s Office of Inspector General (OIG) and the National Intellectual Property Rights Coordination Center, which is run by Immigration and Customs Enforcement‘s (ICE) Homeland Security Investigation unit. 

“The goal of the initiative,” the memo reads, “is to prevent, detect, and combat counterfeit information technology parts and components from entering the SEC’s procurement supply chain.”

Other investigation documents viewed by Motherboard include an attempt to hunt for a leak after nonpublic information about a Tesla investigation was reported by the Wall Street Journal, as well as a case opened up against a man who made a fake filing in a bid to inflate the company’s stock prices and profit.

The Tesla report deals with a 2016 Wall Street Journal article titled “SEC Investigating Tesla for Possible Securities-Law Breach” that revealed a Tesla owner died in an accident and the National Highway Traffic Safety Administration (NHTSA) was looking into whether Tesla’s “Autopilot” feature was activated. The SEC’s own investigation was nonpublic at the time, spurring an investigation that targeted 12 SEC employees and pored over their emails, phone, and mobile device records. The SEC was unable to find the leak and declined to pursue any sort of prosecution.

In the case of the false Fitbit filing, a man in Virginia pretended to be the chief financial officer of ABM LTD, a China-based company, and created an account in the SEC’s Electronic Data Gathering, Analysis, and Retrieval system (EDGAR). In November 2016, he submitted a filing there reporting ABM made a tender offer to Fitbit’s board of directors—a bid to takeover a company by buying all outstanding common shares. The filing also listed an international phone number, as well as an address in Shanghai in case the SEC looked a bit closer.

The filing went public the next day, resulted in a “significant” increase in Fitbit’s trading volume, and raised its market cap by $100 million at one point. Fitbit announced that the tender offer was fake, leading to the SEC uncovering that ABM was created just a few days before the filing. The investigation quickly identified Robert Murray, a 23 year old Virginia resident, as the one responsible after tracking his IP address and would later find browser history searches for tips on how to disguise IP addresses. 

Murray saw a profit of almost $4000 as a result of Fitbit options contracts he held. At his prison sentencing in 2018, Murray told the judge he deeply regretted his scheme and it was "one of the stupidest things I can imagine anyone ever doing." Murray was sentenced to two years in prison.

This is just a taste of what goes on in the depths of the SEC, and if you know any more about these cases or any others, contact us.