Yes tweeting false information is a crime, at least in the USA. Scottish trader James Craig has been charged by US prosecutors with fraud after he set up two twitter accounts and distributed false information on US firms Audience and Sarepta. This caused the share prices of those companies to fall by 28% and 16% and caused investors to lose over £1 million. Mr Craig has now disappeared.
Mr Craig used Twitter account names that were similar to those of Muddy Waters and Citron Research who are both well known for publishing devastating critiques of companies. The FBI led the investigation into the case and the SEC filed the case in court. Brian Stretch, Acting U.S. Attorney in the Northern District of California said “This prosecution makes clear that we will find and prosecute those who commit fraud on our stock exchanges, by any means, no matter where they reside“.
That’s a pretty strong warning to those who use social media as part of stock manipulation schemes. Whether the UK authorities would be able or willing to pursue such cases is another matter altogether. To begin with there is no legal concept of “fraud on the market” as in the USA. The companies themselves cannot easily claim to be damaged and investors would have to rely on exceedingly complex and archaic general tort law (i.e. a civil case) or on the police/SFO pursuing a “conspiracy to defraud” action – a complex kind of case. There is no equivalent criminal law which is surely what we need.