Finance company offering taxi medallion, asset based, sub-debt and consumer loans Medallion Financial Corp. (NASDAQ: MFIN) has been charged with fraud by the United States Securities and Exchange Commission (SEC) for trying to inflate its stock price to its buyers.
According to the complaint filed in Manhattan federal court, SEC is accusing the company together with its president Andrew Murstein, of having paid a California media strategist to anonymously promote the company of various websites including New York Business, Huffington Post, Seeking Alpha and The Street.com
Murstein who is also the company’s founder and its largest shareholder, allegedly kept touters on the company’s payroll for almost two years and paid hush money to keep one quiet. He is also accused of fraudulently inflating the company’s banking unit with an aim to offset loan losses.
The above action was against the advice which the company’s president had been given by his financial advisor. Additionally, Murstein also fired a valuation firm which refused to vet the scheme aimed at inflating the company’s valuation.
“Murstein allegedly paid for more than 50 articles and hundreds of positive comments, which were really paid advertisements. Companies also cannot shop for higher valuations when there is no evidence to support them,” said director of SEC’s office in New York, Richard Best.