A Sandy Springs resident has pleaded guilty to fraud as part of a years-long scheme to manipulate the prices of short-term call options in large, publicly traded companies.
According to a news release, Bart Ross, 56, was charged with conspiracy to commit wire and securities fraud arising from the plan. His sentencing hearing is set for March 26 at 9:30 a.m. before U.S. District Court Judge Leigh Martin May.
“Ross and others were able to cheat the market by perfectly timing their trades on false rumors of their own design,” U.S. Attorney Byung J. “BJay” Pak said in the release. “We will fight all forms of securities fraud, whether it involves defrauding investors, insider trading, pump-and-dump schemes, or the type of sophisticated market manipulation at issue here.”
According to Pak, the charges and other information presented in court, between about February 2017 and January 2020, Ross and at least four other individuals conspired to execute a scheme in which they traded securities—primarily short-term call options—in large, publicly traded companies (often Fortune 500 companies) based on materially false rumors about those companies that they themselves generated and disseminated. These rumors were intended to drive up the price of the securities (both the underlying stock and options).
Call options are essentially a contract that gives the options’ holder the right, but not the obligation, to buy shares of the underlying stock at a set price per share—the option’s strike price—on or before a set future date (the option’s expiration date). Generally, the holder of a call option benefits when the price of the underlying stock increases. Short-term call options are ones that generally expire within a week.
Ross, who was previously registered as a broker with the Financial Industry Regulatory Authority (FINRA), and the co-conspirators generated the rumors.
He executed about 49 trades based on the generation and dissemination of false rumors, including in March and April 2018, when he traded short-term call options in Disney and Ben Franklin Resources, respectively. Overall, Ross earned about $35,000 in profits from the scheme, according to the release.