The financial district of New York City representing financial operations.
Medallion Financial Corp. has been fined $4 million by the SEC for manipulating stock prices through false news articles. This includes a $3 million penalty for the company and a $1 million fine for President Andrew Murstein. An investigation revealed that over 50 misleading articles were distributed to mislead investors. The SEC’s actions highlight ongoing market manipulation issues while Medallion seeks to refocus on growth after the settlement.
New York – Medallion Financial Corp., a financial firm based in New York, has been fined a total of $4 million for allegedly manipulating its stock prices through the dissemination of false news articles. The settlement comes as part of actions taken by the Securities and Exchange Commission (SEC) and involves a $3 million penalty for the company itself and a $1 million fine for its president, Andrew Murstein.
The judgment was rendered by Judge Lewis A. Kaplan of the US Southern District of New York. The SEC’s investigation into the firm began in December 2021 under the leadership of SEC Chair Gary Gensler. The commission’s complaint details how Medallion and Murstein misled investors by failing to provide significant information regarding the fair value of Medallion Bank.
According to the SEC, Murstein contracted media strategists to place over 50 misleading articles on various websites, including HuffPost and Crain’s New York Business, between 2014 and 2017. Reports indicate that Murstein edited these articles, presenting them as if they were authored by actual investors expressing positive opinions about Medallion stock. The complaints allege that these articles did not disclose that their authors received compensation and that they were manipulated to foster a positive perception of the company’s financial condition.
Further allegations describe Murstein’s actions as “opinion-shopping” after a valuation firm declined to support his inflated estimation of the company’s worth, which he set at $193 million. Despite declining prices in taxi medallions—a license required for yellow cab operation in New York City—the value of Medallion’s banking unit reportedly rose from $166 million to $280 million by the end of 2016.
As a part of the settlement, California public relations agent Lawrence Meyers, who engaged in the misleading scheme, has been fined $100,000. Notably, all parties involved in the settlement neither admit nor deny the allegations presented against them.
A spokesperson for Medallion Financial stated that the agreement with the SEC allows the firm to shift its focus exclusively toward growth, eliminating distractions related to legal disputes. The leadership of Medallion previously amassed substantial revenue, exceeding $42 million from 2002 to 2014. Following the settlement announcement, Medallion’s stock price stood at $9.50.
Current data shows that there are 13,587 taxi medallions in New York City, which are necessary for each yellow taxi. Once valued at approximately $1 million under the administration of former Mayor Michael Bloomberg, the price of taxi medallions has drastically declined due to rising competition from ride-sharing services like Uber and Lyft.
In light of these developments, Medallion Financial has been working to adjust its business model to focus more closely on traditional consumer and commercial banking practices. Murstein has also attracted media attention in the past for his personal life, including a notable incident in 2015 where he hired singer Nicki Minaj to perform at his son’s bar mitzvah.
This case highlights ongoing issues relating to market manipulation and the regulatory landscape that seeks to protect investors from misleading practices. As the SEC continues to enforce strict measures, firms are encouraged to adhere to ethical standards in their communications with the public and investors.
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