Motley Fool Stock-Pick Hacker Pleads Guilty to $3 Million Fraud

An Idaho man who worked as an information technology professional has admitted to having earned at least $3.5 million by illegally accessing stock picks from the personal finance website Motley Fool before they were published.

David Stone, a freelance web developer from Nampa, Idaho, pleaded guilty on Friday to securities fraud in New York before U.S. District Judge Mary Kay Vyskocil as part of a settlement with federal prosecutors and is expected to be sentenced on 14 february. Prosecutors said Stone provides computer support to small businesses through remote access to their computer systems.

Stone, 37, was charged in May with gaining unauthorized access to Motley Fool’s computer system and viewing the group’s recommendations before they were announced to paying subscribers. He then traded on them, sometimes using options contracts that only paid if the stock gained in a week, and also shared the information several times between January 2021 and March 2022 with another person who gained more than $2.7 million, prosecutors said in a statement. .

While prosecutors have not identified the investment adviser or the tippee, the U.S. Securities and Exchange Commission filed a tandem civil lawsuit against Stone who also named a friend, John D. Robson, as an accomplice to the stratagem. Robson has not been criminally charged. The SEC said the pair engaged in a scheme that generated more than $12 million in illicit profits since at least November 2020.

Among the dozens of recommended companies whose stocks Stone and Robson traded based on the hacks were Inc., Lululemon Athletica Inc., Peloton Interactive Inc., Airbnb Inc. and Coinbase Global Inc., according to the SEC. .

Prosecutors agreed that Stone faces 46 to 57 months in prison under federal sentencing guidelines and a fine of $20,000 to $5 million.

The case is US v Stone, 22-cr-510, US District Court, Southern District of New York (Manhattan).

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