This case was last updated from PACER on 10/02/2021 at 07:35:35 (UTC).

United States Securities and Exchange Commission v. Melnick

Case Summary

On September 30, 2021, the Securities and Exchange Commission (the “Commission” or “Plaintiff”), represented by James Carlson and Stephan J. Schlegelmilch, attorneys at SEC’s D.C. regional office, filed a civil enforcement action against Mark J. Melnick (“Melnick” or “Defendant”), seeking injunctive relief, civil monetary penalty, and disgorgement of all ill-gotten gains along with prejudgment interest for the alleged fraudulent scheme of Defendant. This case was filed in the U.S. District Court in the Northern District of Georgia with Judge Thomas W. Thrash, Jr. presiding.

 

In the complaint Plaintiff alleged that, “Between January 2018 and January 2020 (the “Relevant Period”), Melnick engaged in a fraudulent scheme to manipulate the market for securities of numerous publicly- traded companies by disseminating false rumors designed to cause the prices of those companies’ stock and options to rise temporarily, and profitably trading around such rumors. Melnick, the host of a daily subscription based real-time trading webcast, received notice from another scheme participant (“Trader A”) when certain publicly-traded companies were about to be the subjects of the false rumors. Trader A directed Melnick to purchase securities in the respective companies prior to the false rumors’ dissemination.”

 

Plaintiff also alleged that, “Melnick assisted in the dissemination of the rumors by informing his webcast subscribers that there was “chatter” about the subject companies. Melnick also assisted by providing technical analysis regarding the subject companies’ stock trading to Trader A, which Trader A then used to decide if and when to disseminate the false rumors. Melnick’s disclosure of the existence of chatter to his subscribers coincided with the dissemination of the false rumor to Trader A’s contacts, which included individuals affiliated with numerous real-time financial news services, trading chat rooms and other financial news purveyors with sizable online followings. This dissemination often resulted in a brief increase in the prices of the companies’ securities. Melnick then sold his securities at prices inflated by the false rumors. Between January 2018 and January 2020, Melnick traded around the false rumors over 100 times, earning $374,835 in unlawful profits.”

 

There are two claims for relief laid down by Plaintiff. The first claim is for the alleged violation of Section 17(a) of the Securities Act and the second claim is for the alleged violation of Section 10(b) of the Exchange Act and Rule 10b-5, thereunder.

 

In its prayer for relief, Plaintiff has requested the court to permanently restrain and enjoin Melnick and his agents and all persons in active concert or participation with him who receive actual notice of the injunction by personal service or otherwise from, directly or indirectly, engaging in conduct in violation of Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, order Melnick to pay disgorgement of $374,839, along with prejudgment interest of $39,521.68 pursuant to Section 21(d)(7) of the Exchange Act, order Melnick to pay a civil monetary penalty pursuant to Section 20(d) of the Securities Act and Section 21(d)(3) of the Exchange Act, and grant such other and further relief as the court may deem just and proper.

 

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Case Details Parties Documents Dockets

 

Case Details

  • Case Number:

    1:21-CV-04054

  • Filing Date:

    09/30/2021

  • Case Status:

    Pending - Other Pending

  • Case Type:

    Finance - Security/Commodity/Exchange

Judge Details

Presiding Judge

Thomas W. Thrash, Jr

 

Party Details

Plaintiff

United States Securities and Exchange Commission

Defendant

Mark J. Melnick

Attorney/Law Firm Details

Plaintiff Attorneys

James Carlson

Attorney at Securities & Exhange Commission

100 F St. Ne, Sp3 - Mail Stop 5971

Washington, DC 20549

Stephan J Schlegelmilch

Attorney at Securities and Exchange Commission

100 F Street, Ne, Room 1500

Washington, DC 20549

 

Court Documents

#1

1 #1

Civil Cover Sheet

#2

2 #1

Text of Proposed Order - Judgement as to Defendant Mark J. Melnick

 

Docket Entries

  • 10/01/2021
  • View Court Documents
  • DocketNotification of Docket Correction re Case was incorrectly opened under 1:21-cv-5054-TWT #1 Complaint. (vs) (Entered: 10/01/2021)

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  • 09/30/2021
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  • Docket(#2) CONSENT of Defendant Mark Melnick by United States Securities and Exchange Commission re #1 Complaint, (Attachments: #1 Text of Proposed Order - Judgement as to Defendant Mark J. Melnick)(vs) (Entered: 10/01/2021)

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  • 09/30/2021
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  • Docket(#1) COMPLAINT filed by United States Securities and Exchange Commission. (Attachments: #1 Civil Cover Sheet)(vs) Please visit our website at http://www.gand.uscourts.gov/commonly-used-forms to obtain Pretrial Instructions and Pretrial Associated Forms which includes the Consent To Proceed Before U.S. Magistrate form. Modified on 10/1/2021 to edit filed date (vs). (Entered: 10/01/2021)

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