The U.S. attorney for the Southern District of New York announced the arrest of a trader on securities and wire fraud charges, who allegedly manipulated Fitbit shares last year with a fake tender offer from a Chinese company he registered with the SEC.
"As alleged, Robert Walter Murray created a fake tender offer for Fitbit to drive up its share price and then illegally profit from his manipulation of the market. After profiting at the expense of the public, Murray allegedly took elaborate steps to hide that he was behind the fraud," acting U.S. Attorney Joon H. Kim said in the statement.
The SEC also filed civil charges against Murray and noted in its release that the alleged scheme only netted him $3,100 in profit.
The government alleges Murray submitted a filing on the SEC's Electronic Data Gathering, Analysis and Retrieval, or "EDGAR," system on Nov. 9, 2016, which said a China-based firm called "ABM Capital" offered to acquire Fitbit for $12.50 a share. Fitbit shares then rose on Nov. 10 to $9.27 from the previous day's close of $8.55, resulting in a "manipulation of the market by over $100 million," according to Kim.
Murray allegedly bought call options for Fitbit stock around Nov. 9, 2016, and then sold the options for a profit after the "sham tender offer" moved the company's shares, according to the complaint.
Murray was arrested in Virginia and will be brought to federal court in Manhattan on Friday. He is a mechanical engineer, according to the SEC release.
Fitbit shares are down nearly 25 percent this year through Thursday compared with the S&P 500's 6 percent return. The company's stock was up 1. 7 percent in late trading Friday to $5.51.