CHESAPEAKE, Va. - A Chesapeake is facing two federal charges after an elaborate scheme to drive up Fitbit's stock price, boosting the company's value by $122 million. The complaint filed by the Securities Exchange Commission said 24-year-old Robert Murray submitted a fake filing that a nonexistent company was offering to buy Fitbit for $12.50 a share, which would be about a 46 percent premium.
Court documents filed in the United States District Court Southern of New York, said Murray made more than $3,000. However, if Fitbit's stock climbed to the price of the offer price in the false filing, Murray would have been able to make $53,200.
On November 9 Murray purchased nearly 15,000 shares of Fitbit stock at $8.50 and $9 a share. Then minutes later, court documents say Murray, or someone working with him, filed the false claim. Court documents said Fitbit's stock instatly surged rising to a high of $9.28 November 10. Then, Murray started selling his Fitbit call options making $3,118.
"He planned it all out. He figured a big filing would make investors speculate it would go up, it did. Then he made the profit," said David Quan, an investment adviser representative with the World Financial Group.
Fitbit denied knowledge of any offer. Murray is charged with securities fraud and wire fraud and could face up to 40 years in prison.
In the court documents, the complaint said Murray's actions caused harm to the United States securities markets and investors. Those who purchased Fitbit shares or options shortly after the fake filing paid artificially inflated prices.
It all started November 4, 2016 said court documents. Murray, or someone working with him, concealed his identity by using an IP address located to a company in California. This made it look like someone else was accessing EDGAR, the SEC's commission for accepting and publicly releasing submissions from companies. Court documents say Murray had conducted online research with two previous EDGAR manipulation cases.
He is currently out on a $250,000 bond. He's set to appear in court August 17 in New York City.