Jun 3, 2024 - Business

Feds accuse investor of $4 billion "pump and dump" scheme

Illustration of a camera with a strap made out of barbed wire

Illustration: Sarah Grillo/Axios

When Trillium offered to buy Getty Images for $4 billion in April 2023, the Boston-based investment firm wouldn't disclose how it planned to finance the deal or how much money it managed.

  • That's because Trillium didn't plan to actually buy Getty, and its brokerage account had a balance of just $17.32.

The latest: The SEC and DOJ on Friday both charged Trillium and its CEO Scott Murray with securities fraud, essentially claiming that the Getty episode was a pump-and-dump scheme.

  • Murray, who has been both CEO and director of public companies, agreed to plead guilty to one count of securities fraud.
  • Trillium and Murray also agreed to a settlement with the SEC that includes a ban on participating in certain securities activities, civil penalties, and disgorgement.

Behind the scenes: If the allegations in the SEC's complaint are accurate, then Murray is one of the most brazen and dumbest corporate crooks in recent memory.

  • He spent six months buying stock and options in Getty, at an average of $5.51 per share and issued several press releases agitating for change.
  • Getty, whose major backers include Koch Industries and Carlyle, largely ignored him. The stock closed at $5.06 per share on April 21, 2023. Murray was underwater on both the shares and the options, as was a personal friend he had told to invest.
  • The following Monday, Trillium at 8:30am announced a nonbinding proposal to buy Getty for $10 per share. Shares climbed in premarket trading. Within one minute of the market open, Murray was selling off his position. One hour later, he was completely out. So was his friend.
  • Murray did not disclose the securities sales to inquiring reporters, including from Axios, nor to several private equity firms he contacted after his sales about possibly backing the $4 billion bid.

By the numbers: Getty obviously didn't go private at $10 per share and closed trading on Friday at just $3.59.

Zoom out: Merger-related securities scams aren't too unusual, but the perpetrator usually executes the fraud via a few degrees of separation. Maybe through a friend of a cousin's spouse.

  • Murray, however, put a flaring beacon on his lapel. And, just for kicks, allegedly lied about it when the FBI came calling.

The bottom line: If it feels like a potential acquirer is hiding something, they probably are.

Go deeper