Shares of Medallion Financial Corp. MFIN,
fell 56.5% to a 13-month low in pre-market trading on Wednesday, to pace all pre-market declines, after the Securities and Exchange Commission accused the New York-based banking holding company and its director of the operating Andrew Murstein for engaging in “fraudulent schemes” to increase its share price. The SEC complaint alleges that Medallion and Murstein engaged in an “illegal sale” of its shares by paying media strategy firm Ichabod’s Cranium Inc. to post positive articles about the company on various websites, including the Huffington Post, Seeking Alpha and TheStreet.com. Ichabod’s Cranium and its owner Lawrence Meyers have also been indicted by the SEC. “With Murstein’s knowledge, Meyers and others created false identities so that their opinion pieces appeared credible to potential investors,” the SEC said in a statement. “The complaint further alleges that Medallion and Murstein fraudulently increased the book value of Medallion Bank (the Bank), a wholly owned subsidiary of Medallion, to offset losses related to the taxi locket loans.” Medallion stock, which was on course to open at the lowest price since November 2020, had climbed 72.5% this year, while the SPDR S&P Reginal Banking KRE ETF,
rebounded 36.8% and the S&P 500 SPX,
had advanced 27.4%.