The SEC has charged Milan Vinod Patel, a resident of Cumming, Georgia, for disseminating over 100 false rumors about publicly traded companies, resulting in more than $1 million in illicit trading profits. In the past, the SEC had charged four other individuals, namely Barton Ross, Mark Melnick, Anthony Salandra, and Charles Parrino, for their roles in the scheme.
Patel’s Role in the Scheme
According to the SEC’s complaint, Patel had received false rumors about corporate mergers or acquisitions involving publicly traded companies from Ross, Salandra, or Parrino. Patel then spread these rumors to his contacts in financial news services, chat rooms, and message boards. Additionally, Patel shared these rumors with Melnick, who was the host of a stock trading webcast, and Melnick shared them with his subscribers.
The SEC’s complaint alleges that between December 2017 and January 2020, the circulation of over 100 false rumors caused the prices of the subject companies’ securities to rise temporarily. This allowed Patel to sell his holdings in these securities, generating more than $1 million in illicit trading profits.
The SEC’s Action
Joseph G. Sansone, Chief of the Enforcement Division’s Market Abuse Unit, said that out of the five individuals involved in the scheme, Patel played the central role in repeatedly spreading the false rumors via the internet. The SEC’s action seeks to hold Patel accountable for his alleged misconduct and serves as a warning to others who might engage in similar schemes.
The SEC has charged Patel with violating Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The complaint has been filed in the United States District Court for the Northern District of Georgia.
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Mark Astarita is a nationally recognized securities attorney, who represents investors, financial professionals and firms in securities litigation, arbitration and regulatory matters, including SEC and FINRA investigations and enforcement proceedings.
He is a partner in the national securities law firm Sallah Astarita & Cox, LLC, and the founder of The Securities Law Home Page - SECLaw.com, which was one of the first legal topic sites on the Internet. It went online in 1995 and is updated daily with news, commentary and securities law related links.