Shares of Medallion Financial Corp. plunged yesterday after U.S. regulators accused the New York-based lender to taxi drivers of seeking to illegally boost its stock price amid intense competition from Uber Technologies Inc. and Lyft Inc., Bloomberg News reported. The Securities and Exchange Commission alleged that after a string of banner years, Medallion floundered as the popularity of ride-sharing apps caused the value of taxi medallions, which were used as collateral for loans, to plummet. As the company’s stock started slumping in 2014, it tried to drown out short-sellers by flooding media websites with bogus news articles, the SEC said in a complaint filed in federal court. Medallion shares, which were temporarily halted Wednesday, fell 21% to $6.67 in New York trading, marking their biggest one-day decline since March 2020. The company traded at almost $18 a share eight years ago. The regulator said the company’s president, Andrew Murstein, paid a public relations firm to produce hundreds of posts — often under pseudonyms — that touted Medallion. Articles, which were designed to appear as if they came from actual investors who were bullish on the company, appeared on sites like Huffington Post, Seeking Alpha and TheStreet.com. The regulator also accused Murstein of pressuring investment banks to inflate the valuation of the company’s Medallion Bank unit. The move, which wasn’t disclosed to investors, resulted in the subsidiary’s fair value jumping to $280 million at the end of 2016, from $166 million just two quarters earlier even as the price of medallions slumped, the SEC said.
