NYC taxi lender fined $4M over ‘pretend information’ plants – Business News
A New York financier and his publicly traded firm that bankrolled loans to taxi drivers had been fined $4 million for planting pretend information articles online to spice up the company’s stock price.
Medallion Financial Corp. — which received hit a decade in the past as ride-sharing apps like Uber and Lyft started to tank the worth of taxi medallions — should pay $3 million as half of a settlement after a ruling by Judge Lewis A. Kaplan of the US Southern District of New York.
Medallion president Andrew Murstein — who made headlines when he employed Nicki Minaj to carry out at his son’s bar mitzvah in 2015 — should fork out over $1 million in a ruling on a case introduced by the Securities and Exchange Commission, in keeping with a May 29 securities submitting.
Medallion president Andrew Murstein, seen right here at a Yankees sport, has been hit with a $1 million tremendous. Anthony J. Causi
The SEC criticism, introduced in December 2021 underneath the company’s President Biden-appointed chair Gary Gensler, contained “more than sufficient allegations to support the claim that Murstein and Medallion Financial misled investors by withholding information material to Medallion Bank’s fair value,” Kaplan wrote in a separate submitting.
The Post beforehand reported on Murstein’s brazen scheme to secretly pay for “fake news” tales because the rise of Uber and Lyft precipitated traders to bitter on taxi-related shares, leaving Medallion’s share price floundering.
Judge Kaplan ruled that securities legal guidelines had been damaged when the highest govt employed media strategists to position at the very least 50 tales from 2014 to 2017 on websites resembling HuffPost and Crain’s New York Business.
The taxi medallion lender additionally didn’t disclose that the authors of the bogus blogs had been being paid, and that many of the tales had been personally tweaked and edited by Murstein.
Instead, the posts had been written in a technique to make it look as if that they had been penned by precise traders who had been bullish on Medallion stock.
Prices for a prized medallion soared to as a lot as $1 million underneath Mayor Michael Bloomberg earlier than crashing when ride-sharing apps resembling Uber and Lyft cornered the market. NY Post
“Neither Medallion Financial nor Murstein ever disclosed to investors Murstein’s conduct in recruiting, paying, and instructing his touters,” Kaplan wrote..
“Murstein acted knowingly or recklessly in hiring and keeping touters on the Medallion Financial payroll.”
The choose discovered he had gone “opinion-shopping” when one valuation firm refused to disregard his deteriorating medallion portfolio and settle for his inflated view of the company’s precise value of $193 million.
It resulted within the worth of Medallion’s banking unit leaping to $280 million on the finish of 2016, from $166 million simply two quarters earlier, even because the price of medallions slumped.
California PR agent Lawrence Meyers, one of the principle communications specialists employed by Murstein, should additionally pay a $100,000 tremendous, in keeping with SEC filings.
As half of the settlement deal, all defendants neither admit nor deny the allegations, the ruling mentioned.
“Our agreement with the SEC puts this nearly decade-old matter behind us and enables us to apply our full focus to continuing to grow the company,” a Medallion spokesperson instructed The Post on Wednesday.
“It removes the distraction, cost, and uncertainty of continued litigation and is in the best interest of the Company and our shareholders.”
Murstein splashed the money on getting Nicki Minaj to carry out at his son’s bar mitzvah in 2015. Evan Agostini/Invision/AP
News of the settlement was first reported by American Banker on Tuesday.
The brash boss and his father, Leon, raked in more than $42 million from 2002 to 2014, in keeping with the New York Times.
Aside from spending lavishly on the “WAP” singer, Medallion Financial purchased up skilled lacrosse and NASCAR groups, the paper reported.
“One wonders if the SEC is going easy on them a bit, due to the change in administration or lack of staff,” a source close to the state of affairs instructed The Post.
“That should give investors pause for thought if boards and executives can get away with such behavior.”
President Trump-nominated SEC Chair Paul Atkins changed Gensler.
Rebecca Fike, a companion at Vinson & Elkins and a former SEC enforcement lawyer, added that it reveals “a desire to wrap up actions that were initiated under the previous administration.”
“I expect the Atkins SEC to favor quicker resolutions and accept much lower civil penalties, particularly where the staff cannot show a corporate benefit from the fraudulent acts,” she instructed The Post.
Medallion made a mint offering loans to low-income drivers who needed to get a allow to drive NYC’s iconic yellow cabs. Christopher Sadowski
The company’s stock closed Wednesday at $9.50.
By law, there are solely 13,587 taxi medallions in New York City, and every yellow cab should have a medallion linked to it. Prices for a prized medallion soared to as a lot as $1 million underneath Mayor Michael Bloomberg.
But they plunged underneath harder competitors from the ride-sharing apps, leaving the drivers drowning in debt and piling the stress on Medallion’s revenue margins.
Medallion went public in 1996. The company had been initially set up by Murstein’s taxi-driving father, a Polish immigrant, who began trading some of the cab medallions.
The case in opposition to Medallion was first introduced in December 2021 underneath Gary Gensler, who was Joe Biden’s decide to be chair of the Securities and Exchange Commission. REUTERS
A driver would put up roughly a third of the acquisition price when shopping for the allow, with Medallion financing the remaining with curiosity over a fixed period of time.
After years of protests from drivers amid the rise of digital rivals, former New York Mayor Bill de Blasio unveiled a deal in November 2021 to cap medallion loans at $170,000 and curiosity repayments at 5%.
Medallion has since tried to shift to more conventional client and industrial banking over the previous few years.
