“Out of the five individuals involved in this scheme, we allege that Patel played the central role of using his contacts to repeatedly spread the false rumors via the internet, generating more than $1 million in illicit profits for himself.”
The Securities and Exchange Commission has charged Milan Vinod Patel with a false rumors scheme that generated more than $1 million in illicit trading profits for him alone.
Milan Vinod Patel stands accused of spreading more than 100 false rumors about public companies together with other defendants Barton Ross, Mark Melnick, Anthony Salandra, and Charles Parrino.
100 false rumors in ‘pump and dump’ scheme
The complaint alleges that Milan Vinod Patel received rumors that he knew to be false from Ross, Salandra, or Parrino about purported market-moving events, such as corporate mergers or acquisitions, involving publicly-traded companies, and disseminated the rumors to his contacts at financial news services, chat rooms, and message boards.
The defendant also allegedly disseminated the rumors to Melnick, a host of a stock trading webcast, who shared them with his webcast subscribers.
The SEC claims that the circulation of more than 100 rumors between December 2017 and January 2020 caused the prices of the subject companies’ securities to rise temporarily, which allowed Milan Vinod Patel to sell his holdings and generate more than $1 million in illicit trading profits.
“Out of the five individuals involved in this scheme, we allege that Patel played the central role of using his contacts to repeatedly spread the false rumors via the internet, generating more than $1 million in illicit profits for himself,” said Joseph G. Sansone, Chief of the Enforcement Division’s Market Abuse Unit. “Today’s action seeks to hold Patel accountable for his alleged misconduct and serves as a warning to others who might engage in similar schemes.”
Mark Melnick spread false rumors on stock trading webcast
In October 2021, FinanceFeeds covered the SEC’s complaint against Mark Melnick, who made $374,000 in illicit profits by spreading false rumors on a stock trading webcast that he hosted. He allegedly received advance notice of companies about which another scheme participant planned to spread false rumors, and then shared the companies’ names with subscribers to his online trading room.
Mark Melnick advised the subscribers that he had taken positions in the companies, while other scheme participants also spread false rumors through real-time financial news services, financial chat rooms, and message boards.
He was ordered to pay a disgorgement of $374,835 plus prejudgment interest and a civil penalty in an amount to be determined at a later date. He also agreed to a penny stock bar and to be barred from the securities industry, and has pleaded guilty to related criminal charges in a parallel action.