Florida trader faces fraud charge over 'manipulative' press release

26 May 2009

A Florida-based trader has been charged with fraud after he allegedly wrote and distributed a fake press release designed to manipulate the stock price of luxury homes developer WCI Communities.

Richard Karp is said to have sent the release to a number of media outlets in July 2008, claiming it was an official statement from WCI. In it, he claimed the company's board had received a buyout offer worth up to $220 million.

When the news was reported nationally, shares in WCI rocketed on the New York Stock Exchange and Mr Karp is said to have made illegal profits of $29,000 after selling his holding in the company at a vastly inflated price.

The Securities and Exchange Commission, which brought the charges against Mr Karp, contests that he had actively traded in WCI's stock between late 2007 and early 2008 in the hope that a major shareholder would launch a buyout.

"When that didn't happen, Karp tried to take the news into his own hands to enrich himself and cheat the investing public," said David Nelson, director of the regulator's Miami office.

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