It’s no secret at this point Uber And elevators The arrival of a taxi parking lot in the early 2010s dealt a major blow to the traditional taxi industry, but the fees Foot This week by the Securities and Exchange Commission (SEC) showed how far one company, Medallion Financial in New York, was willing to go to stay relevant.
In its filing, the SEC accused the company, and CEO Andrew Morstein, of partnering with a California media strategy firm called Ichabod’s Cranium to put fabricated positive stories in major publications using fake identifiers in a desperate attempt to increase the company’s share price between 2014-2017. The stories have found their way to prominent sites such as The Huffington Post, LookingAlpha, and TheStreet.com.
“Murstein allegedly paid for more than 50 articles and hundreds of positive comments, which were paid advertisements that were posted across the web in an attempt to deceive investors about the value of Medallion’s stock,” said Richard Best, director of the New York regional office in New York. a permit.
In addition to paying for articles, the Securities and Exchange Commission has accused Medallion of pressuring investment banks to inflate Medallion’s financial value. “Companies also cannot shop for higher ratings when there is no evidence to support them,” Best added. Medallion stock gained 56% slope In pre-market trading after fee news.
Murstein and Medallion are charged with violating the anti-fraud, books and records, internal controls, and anti-promotion provisions of federal securities laws, while Murstein is also charged with making false statements to Medallion’s auditor.
Of course, that’s not the way Medallion sees it. in a statment Submitted to Al Jazeera, Medallion denied that any of the SEC’s allegations amounted to securities fraud, and said it plans to “vigorously defend against the unsubstantiated charges by the SEC.”
In a separate statement emailed to Gizmodo, Medallion reiterated his conviction that the SEC accusations did not amount to securities fraud, without denying specific details alleged in the SEC complaint.
“The actions in question occurred five or more years ago at a time when short sellers were participating in an online campaign to lower the company’s share price for their own personal profit by spreading misleading, misrepresenting and misrepresenting its business,” Medallion said. “Medallion has only sought to provide the market with an accurate understanding of the company’s financial position and financial outlook, and an adequate and transparent assessment of Medallion Bank and its other assets.”
Medallion continued to describe the SEC’s charges as mischaracterizing the company’s “good faith” efforts.
“None of the allegations in the SEC complaint result in securities infringement, and we are confident that a full record will show that Medallion Financial and Andrew Morstein complied with the law,” the company added.
As a quick refresher, New York City taxi medals are generally a piece of metal that proves that a vehicle is legally capable of operating as a city taxi. These medals are regulated by the city government and are fixed for a certain amount (about 13,000 according to Investopedia) to avoid an oversupply of taxis. Although those medals are already in circulation they can be bought and sold in the private market. But that market rate is often out of reach for anyone of the working class trying to operate a taxi, which comes as lending companies like Medallion Financial, which provide loans to drivers, sometimes with uncontrollable Fees and benefits.
This process has been going on for quite some time, but like the New York Times for 2019 Investigation In detail, taxi industry leaders began artificially inflating medal values for years starting in the early 2000s, driving prices up to over $1 million by 2013.) To make matters worse, the arrival of Uber and Lyft led to New York quickly deteriorated the value of New York City taxi medals (which were held as collateral for loans) and caused the value of Medalion’s stock to plummet.
Before anyone sheds a tear on the Medallion, it’s worth bearing in mind Many, Sometimes, appallingly Hinge The accounts of New York taxi drivers who found themselves mired in debt as a result of these loans and the sudden shock that the taxi business model has caused in the industry. These factors, and others, have combined to lead to a wave of driver suicides, some of which have come out Protest, Most Despair.
The SEC fee comes at a bad time for Medalion, which has been trying to distance itself from the taxi business. according to Bloomberg, Medalion said in its 2020 annual report that it plans to focus more on consumer lending. Before that, it was a medal It said Lending to RV buyers started and moved forward with Purchase For a professional lacrosse team.
Update 3:36PM ET: . has been added Statement from Medallion Financial Corp.