WASHINGTON -- U.S. investors thought they were buying access to a stock-picking robot named "Marl." Instead, they paid millions to teen twin brothers in England who face civil fraud charges for an alleged penny-stock swindle. The robot didn't exist.
The stocks picked were companies that paid hefty fees to Alexander and Thomas Hunter, just 16 when the alleged scheme began in 2007, the Securities and Exchange Commission said Friday. As stock prices jumped, the Hunters' clients dumped their shares for a profit.
"While touting their supposed breakthrough investment technology on two Web sites, the Hunters were racking up fees as stock promoters through a third," said Thomas Sporkin of the SEC's office of market intelligence, in a statement. The SEC filed a civil suit against the Hunters, who are now 20, in U.S. District Court in Manhattan Friday.
Officials are asking the court to block the twins from the securities industry and order them to return the money they collected from investors. They are also seeking additional financial penalties.
It all began with a Web site called daytradingrobot.com, according to a narrative sketched out by the SEC.
The Hunters drew roughly 75,000 investors, who were promised stock tips generated by a sophisticated program. The investors, most of them in the United States, paid for newsletters revealing the robot's insights and a "home version" of the software.
The twins collected $1.9 million more from firms seeking Marl's endorsement, the SEC said. On the site equitypromoter.com, Thomas Hunter wrote that his Web sites attracted thousands of visitors each day. But in 2007, the Hunters advertised for programmers who could make "a small software program which will appear to the user that once running it is analyzing thousands of penny stocks," the complaint said. They added: "Basically this is almost a 'fake' piece of software and needs to simply appear advanced."