Medallion Financial stock plunges toward 13-month low after SEC discloses fraud charges

Shares of Medallion Financial Corp.
MFIN,
-26.98%
plummeted 56.5% toward a 13-month low in premarket trading Wednesday, to pace all premarket decliners, after the Securities and Exchange Commission charged the New York-based bank holding company and its Chief Operating Officer Andrew Murstein for engaging in “fraudulent schemes” to boost its stock price. The SEC’s complaint alleges that Medallion and Murstein engaged in “illegal touting” of its stock by paying media strategy company Ichabod’s Cranium Inc. to place positive stories about the company on various websites, including Huffington Post, Seeking Alpha and TheStreet.com. Ichabod’s Cranium and its owner Lawrence Meyers were also charged by the SEC. “With Murstein’s knowledge, Meyers and others created fake identities so their opinion pieces would appear credible to potential investors,” the SEC said in a statement. “The complaint further alleges that Medallion and Murstein fraudulently increased the carrying value of Medallion Bank (the Bank), a wholly owned subsidiary of Medallion, to offset losses relating to the taxicab medallion loans.” Medallion’s stock, which was on track to open at the lowest price seen since November 2020, had run up 72.5% this year, while the SPDR S&P Reginal Banking ETF
KRE,
+0.34%
had rallied 36.8% and the S&P 500
SPX,
+0.11%
had advanced 27.4%.