Medallion shares plummeted after U.S. authorities criticized a New York City taxi operator for raising its price by filling websites with fake news.
Shares of Medallion Financial Corp. was suspended Wednesday after U.S. authorities accused a New York-based lender of taxi operators of trying to raise prices illegally during a major rivalry with Uber Technologies Inc. by Lyft Inc.
The Securities and Exchange Commission reports that a few years later, Medallion collapsed because the popularity of shared-profit programs is increasing the profits of taxi medals, which are used as collateral for loans. As the company’s stock has plummeted since 2013, it has tried to drown small retailers and websites overflowing with false news, the SEC said in a complaint to the federal court.
Medallion shares stopped Wednesday when shares fell below 50% to $ 3.94. Then it resumed trading, destroying about 33% from 10:35 am in New York. The company sold about $ 18 per share eight years ago.
The inspector said the company’s president, Andrew Murstein, had hired a social media company to create hundreds of images – often with pseudonyms – depicting Medallion. The posts, which were designed to appear to be from real investors who were strong in the company, appeared on sites like Huffington Post, Search Alpha and TheStreet.com.
The trustee also accused Murstein of forcing investment banks to increase the value of Medallion Bank. The move, which was not disclosed to investors, caused the company’s profits to plummet to $ 280 million at the end of 2016, from $ 166 million in the previous quarter even though the medallion price fell, the SEC said.
“Companies also can’t buy high prices if there is no evidence to support them,” Richard Best, the SEC’s regional director for New York, said in a statement.
The SEC said it was forcing the company to repay the loan. The supervisor also wants to pay the company fines and prevent Murstein from becoming an official or director of a long-term human trafficking company.
“We want to vigorously defend the SEC ‘s criminal cases,” Medallion said in a statement. “Nothing is said in the SEC’s complaint that causes a breach of security, and we are confident that the entire record will show that Medallion Financial Corp. and Andrew Murstein have complied with this rule.”
In its 2020 annual report, Medallion said it was moving away from the taxi business to focus on consumer lending. In addition to providing medallion funding, the company claims to offer home improvement loans, business ventures and the purchase of luxury cars.