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A tech worker from Idaho has been accused of securities fraud for allegedly trading ahead of the release of stock recommendations from the Motley Fool investment service.

The U.S. attorney’s office for the Southern District of New York charged David Stone, 36, with one charge of securities fraud, for allegedly front running stock tips before they were made public to subscribers of The Motley Fool’s recommendation service.

“As alleged, David Stone used his computer skills to extract pre-publication stock picks from an investment advice service so he could beat the markets and generate millions in trading profits,” said U.S. attorney, Damian Williams, in a release.

The U.S. Securities and Exchange Commission (SEC) filed a parallel civil action in the case too, and it secured a court-ordered asset freeze against Stone and another man who he allegedly shared his tips with, John Robson.

None of the allegations have been proven.

According to the SEC’s complaint, which was filed in federal court in New York, since at least November 2020, Stone, “used deceptive means to obtain pre-release access to stock picks by at least two subscription stock picking services offered by The Motley Fool.”

Once those recommendations were made public, the affected stocks typically traded higher. The SEC alleged that by trading ahead of their dissemination in more than a dozen instances, Stone was able to make approximately US$3.9 million in gross trading profits, and that Robson made almost US$3 million.

The SEC’s complaint also names two of Stone’s family members and two of Robson’s friends, “whose brokerage accounts placed similar trades and generated approximately $5 million by trading ahead of The Motley Fool stock picks,” as relief defendants in the case.

Stone was arrested on the criminal charge, and the SEC charged Stone and Robson with violating federal securities laws.

The SEC is seeking permanent injunctions, disgorgement, and penalties against Stone and Robson, and disgorgement from the relief defendants.