Tech. Science. Culture.
We may earn a commission from links on this page

Taxi Medallion Loan Shark Duped Investors by Planting 'Illegal' Positive News Stories, SEC Says

Medallion Financial allegedly used pseudonyms to place bogus stories in The Huffington Post, SeekingAlpha,, and other sites.

We may earn a commission from links on this page.
Image for article titled Taxi Medallion Loan Shark Duped Investors by Planting 'Illegal' Positive News Stories, SEC Says
Photo: Don Emmert (Getty Images)

It’s no secret at this point that Uber and Lyft’s arrival to the ride-hailing scene in the early 2010s dealt a huge blow to the traditional cab industry, but charges filed this week by the Securities and Exchange Commission (SEC) show just how far one firm, New York’s Medallion Financial, was willing to go to stay relevant.

In its filing, the SEC accused the company, and CEO Andrew Murstein, of partnering with a California media strategy company called Ichabod’s Cranium to place fabricated positive stories in major publications using fake identifies in a desperate attempt to boost the company’s stock price between 2014-2017. Those stories allegedly found their way onto prominent sites like The Huffington Post, SeekingAlpha, and

“Murstein allegedly paid for more than 50 articles and hundreds of positive comments, which were really paid advertisements placed across the web in an effort to deceive investors about the value of Medallion’s stock,” SEC Director of the New York Regional Office Richard Best said in a statement.


In addition to paying for articles, the SEC accused Medallion of pressuring investment banks to inflate Medallion Financial’s value. “Companies also cannot shop for higher valuations when there is no evidence to support them,” Best added. Medallion’s stock took a 56% nosedive in premarket trading following news of the charges.

Both Murstein and Medallion are being charged with violating the antifraud, books and records, internal controls, and anti-touting provisions of the federal securities laws while Murstein is also being charged with making false statements to Medallion’s auditor.


Of course, that’s not how Medallion sees it. In a statement provided to Al Jazeera, Medallion denied that any of the SEC allegations amounted to securities fraud and said it planned to “vigorously defend against the SEC’s unfounded charges.”

In a separate statement emailed to Gizmodo, Medallion reiterated its conviction that the SEC’s charges did not amount to securities fraud, without denying the specific details alleged in the SEC complaint.


“The actions in question occurred five or more years ago at a time when short sellers were engaged in an online campaign to drive down the Company’s stock price for their personal profit by spreading misleading and disparaging information and misrepresenting its business,” Medallion said. “Medallion sought only to provide the market with an accurate understanding of the Company’s financial position and prospects and an appropriate and transparent valuation of Medallion Bank and its other assets.”

Medallion went on to describe the SEC’s charges as a mischaracterization of the company’s “good faith efforts.”


“None of the allegations in the SEC complaint gives rise to a securities violation, and we are confident that the full record will show that Medallion Financial Corp. and Andrew Murstein complied with the law,” the company added.

As a quick refresher, New York City taxi medallions are generally a piece of metal that proves a vehicle is legally able to operate as a cab in the city. Those medallions are regulated by the city government and are fixed at a certain amount (around 13,000 according to Investopedia) to avoid creating an oversupply of cabs. Those medallions already in circulation though can be bought and sold on the private market. But that market price is often beyond the reach of almost any working-class person attempting to operate a cab, which is where lending firms like Medallion Financial come in, offering loans to drivers, sometimes with unmanageable fees and interest.


That process sustained for a time, but as a 2019 New York Times investigation detailed, cab industry leaders began artificially inflating medallion values for years starting in the early 2000s, leading prices to soar past $1 million by 2013.) Making matters worse, Uber and Lyft’s arrival to New York rapidly degraded the value of NYC taxi cab medallions (which were held as collateral for loans) and sent Medalion’s stock value tumbling down.

Before anyone sheds a tear for Medallion though, it’s worth bearing in mind the numerous, at times, horrifically detailed accounts of New York cab drivers who found themselves drowning in debt as a result of these loans and the sudden shock the ride-hailing business model had on the industry. Those, and other factors, collided to usher in a spate of driver suicides, some out of protest, most from despair.


The SEC charge comes at a bad time for Medalion, which has been attempting to distance itself from the cab business. According to Bloomberg, Medallion said in its 2020 annual report that it’s planning to focus more on consumer lending. Prior to that, Medallion had reportedly begun lending to R.V. buyers and had even gone ahead with the purchase of a professional lacrosse team.

Update 3:36 p.m. ET: Added a statement from Medallion Financial Corp.