SEC charges against Francis Sabo in a $100 million securities fraud scheme

Francis Sabo, also known as “Ricky Bobby,” recently faced partially settled charges from the Securities and Exchange Commission (SEC) in connection with a $100 million securities fraud scheme. According to the SEC, Sabo portrayed himself as a reliable expert in selecting stocks and amassed a substantial following on the Atlas Trading forum on Discord. Sabo, along with several co-defendants previously charged by the Commission in December 2022, allegedly employed social media platforms to manipulate the prices of exchange-traded stocks.

This online platform claimed to offer educational content on trading and securities markets.

Details

The SEC asserts that, since January 2020, Sabo, like the previously charged defendants, would purchase certain stocks and then encourage his large social media following to invest in those specific stocks. He accomplished this by sharing price targets and implying that he was personally buying, holding, or increasing his positions in those stocks. However, as alleged in the complaint, Sabo regularly sold his shares when the promoted securities experienced price and/or trading volume surges, without ever disclosing his intentions to unload the stocks while actively promoting them. The SEC further alleges that Sabo profited over $1 million from his involvement in the stock manipulation scheme between January 2020 and December 2022.

Sabo is facing charges of violating the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5, as well as Section 17(a) of the Securities Act of 1933. The SEC's complaint has been filed in the U.S. District Court for the Southern District of Texas, seeking a permanent injunction, disgorgement of ill-gotten gains, prejudgment interest, and civil penalties.

Sabo React

To resolve the SEC's charges, Sabo has consented to an injunction against future violations of the aforementioned provisions of the federal securities laws. The amount of monetary penalties will be determined at a later date, subject to court approval.

Additionally, Sabo faces criminal charges in a parallel action initiated by the Criminal Fraud Section of the U.S. Department of Justice and the U.S. Attorney's Office for the Southern District of Texas.