Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that ROBERT WALTER MURRAY was sentenced today to 24 months in prison for manipulating the market for the stock of Fitbit, Inc. (“Fitbit”), by filing a sham tender offer with the Securities and Exchange Commission (“SEC”) in November 2016. MURRAY’s sham tender offer resulted in a temporary change in Fitbit’s market capitalization of over $100 million. MURRAY pled guilty on November 7, 2017, before U.S. District Judge Katherine B. Forrest, who imposed today’s sentence.
U.S. Attorney Geoffrey S. Berman said: “Robert Murray manipulated the market in Fitbit stock by making a false filing with the SEC about a tender offer. Hoping to take a quick profit from trading in Fitbit stock options, Murray’s attempt to game the system has instead earned him a federal prison sentence.”
According to allegations in a Complaint and Indictment filed in Manhattan federal court, as well as previous court filings and statements made in public court proceedings:
On November 8, 2016, MURRAY, falsely purporting to be an officer at a China-based entity called ABM Capital, created an account on the SEC’s Electronic Data Gathering, Analysis, and Retrieval (or “EDGAR”) system. The next day, MURRAY submitted a filing on EDGAR that reported that ABM Capital had offered to purchase Fitbit for approximately $12.50 a share, a significant premium to the price of Fitbit stock at the time. This filing was made public on November 10, 2016, and, when it was, Fitbit’s stock temporarily increased in response to the news. While Fitbit’s stock had closed at approximately $8.55 a share on November 9, 2016, it reached a high of approximately $9.27 per share, with significantly increased trading volume, after MURRAY’s fake tender offer filing was made public. This resulted in a temporary increase of Fitbit’s market capitalization of around $100 million. The tender offer that MURRAY filed, however, was entirely fictitious, and was instead meant only to increase the value of options in Fitbit stock that MURRAY had purchased just days earlier.
MURRAY also took significant steps to hide his connection to the tender offer filing. For example, he created a separate email account to register with the SEC and to file the sham tender offer, and took efforts to disguise his IP address when accessing that account.
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In addition to the prison sentence, MURRAY, 25, of Chesapeake, Virginia, was sentenced to two years of supervised release. The Court further ordered MURRAY to forfeit a sum of $3,914.08.
Mr. Berman praised the exceptional work of the Office’s criminal investigators, and thanked the U.S. Postal Inspection Service and the Securities and Exchange Commission for their assistance.
This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant United States Attorney Robert Allen is in charge of the prosecution.