Listen to this Article Now
In the face of competition from ridesharing startups Uber (NYSE: UBER) and Lyft, the US Securities and Exchange Commission charged Medallion Financial (NASDAQ: MFIN) Corp and its chief operating officer with conspiring to artificially inflate the lender’s stock price to taxicab medallion buyers (NASDAQ: LYFT).
Medallion’s stock dropped 57 percent to $3.65 in premarket trading. Medallion and COO Andrew Murstein hired a California media strategist to put good stories about Medallion on numerous websites and construct phony identities to make the opinion pieces appear legitimate to investors, according to a complaint filed in federal court in Manhattan on Wednesday.
According to the SEC, Medallion and Murstein exaggerated the worth of the company’s banking unit to offset losses from taxicab loans, and Murstein fired a valuation agency that refused to validate the scheme. Medallion, Murstein, and their attorney did not reply to calls for comment right away. In response to a similar request, a lawyer representing media strategy Ichabod’s Cranium Inc and its owner Lawrence Meyers did not immediately answer.