According to the SEC


A complaint filed in Manhattan court on Wednesday led the Securities and Exchange Commission to charge Medallion Financial Corp. and its chief executive, Andrew Murstein, for violating anti-fraud laws, books and records, internal controls and the anti-bragging provisions of federal securities laws.

Shares of Medallion (MFIN) plunged into trading on Wednesday.

The SEC also accused Murstein of making false statements to Medallion’s auditor about a scheme to pay for media coverage to boost the company’s credibility. Medallion Financial is a publicly traded financial company that occupies leading positions in niche markets such as taxi medallion lending.

Medallion, a Delaware company headquartered in New York City, has embarked on efforts to reverse the fall in its stock price. Medallion shares were down on the growth of ride-sharing companies Uber and Lyft.

In two separate alleged schemes, Medallion has sought to dishonestly inflate its share price by hiring California-based media strategies firm Ichachod’s Cranium, which has also been accused of fraud by the SEC in connection with the lawsuit.

Medallion paid Ichabod to post positive articles about the company on various websites such as the Huffington Post, Seeking Alpha and, according to the complaint, and also created fake identities for opinion pieces written on the company. business that would seem real to investors.

The complaint also alleges that Medallion and Murstein fraudulently increased the book value of Medallion Bank, a subsidiary of Medallion, to offset losses related to competition with Uber and Lyft. A valuation company was fired for refusing to provide an inflated valuation of Medallion Bank.

“Murstein is said to have paid for over 50 articles and hundreds of positive reviews, which were actually paid advertisements placed on the web with the aim of misleading investors about the value of Medallion shares. Companies also can’t seek higher valuations when there is no evidence to back them up, ”said Richard Best, director of the SEC’s New York regional office.

The SEC is asking for permanent injunctions, restitution plus pre-judgment interest, and civil penalties related to the complaint. For Murstein, the SEC is looking for an officer and a direct bar.


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