Virginia Man Pleads Guilty In Manhattan Federal Court To $100 Million Market Manipulation Scheme Involving Fitbit Stock
Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced that ROBERT WALTER MURRAY pled guilty today in Manhattan federal court to securities fraud. In November 2016, MURRAY conducted a scheme to manipulate the market for the stock of Fitbit, Inc. (“Fitbit”) by filing a sham tender offer with the Securities and Exchange Commission (“SEC”). The sham tender offer falsely reported that another entity had made a bid to purchase all outstanding Fitbit stock at a significant premium to the then-existing market price. As a result, the price of Fitbit stock temporarily but significantly increased in price, allowing MURRAY to sell for a profit options that he had previously purchased. MURRAY’s sham tender offer, moreover, resulted in a temporary inflation in Fitbit’s market capitalization of over $100 million.
Acting U.S. Attorney Joon H. Kim said: “As Robert Murray admitted today, he manipulated the market in Fitbit stock by making a false filing with the SEC about a tender offer. After manipulating Fitbit’s stock price and temporarily inflating its market capitalization by over $100 million, Murray sought to take a quick profit from trading in Fitbit stock. Murray’s ill-advised and criminal attempt to game the system has ended in a federal securities fraud conviction.”
According to the allegations in the Complaint and Indictment filed in Manhattan federal court, previous court filings, and statements made in public court proceedings:
On November 8, 2016, MURRAY, falsely purporting to be an officer at a China-based entity called ABM Capital, created an account on the SEC’s Electronic Data Gathering, Analysis, and Retrieval (or “EDGAR”) system. The next day, MURRAY submitted a filing on EDGAR that reported that ABM Capital had offered to purchase Fitbit for approximately $12.50 a share, a significant premium to the price of Fitbit stock at the time. This filing was made public on November 10, 2016, and, when it was, Fitbit’s stock temporarily increased in response to the news. While Fitbit’s stock had closed at approximately $8.55 a share on November 9, 2016, it reached a high of approximately $9.27 per share, with significantly increased trading volume, after the false tender offer filing was made public. MURRAY’s filing, however, was entirely fictitious, and was instead meant only to increase the value of options in Fitbit stock that he had purchased just before filing the sham tender offer.
MURRAY, moreover, took significant steps to hide his connection to the tender offer filing. He created a separate email account to register with the SEC and to file the sham tender offer, taking care to disguise his actual IP address when accessing it.
MURRAY, 24, of Chesapeake, Virginia, pled guilty to one count of securities fraud, which carries a maximum sentence of 20 years in prison and a maximum fine of $5 million. In addition, pursuant to a plea agreement with the Government, MURRAY agreed to forfeit proceeds of the offense. MURRAY is scheduled to be sentenced by Judge Katherine B. Forrest on March 9, 2018.
The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.
Mr. Kim praised the exceptional work of the Office’s criminal investigators, and thanked the United States Postal Inspection Service and the Securities and Exchange Commission for their assistance.
This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant United States Attorney Robert Allen is in charge of the prosecution.