Investor accuses financial firms of 'spoofing' tech company's stock

(CN) — An investor accused two financial firms of illegally manipulating the share price of a tech company’s stock in a federal class action filed Monday.

Aron Reynolds says in the complaint he and other investors were duped into selling their shares in Genius, a Singapore-based education technology company, after Citadel Securities and Virtu Americas artificially depressed the stock’s price through a large-scale “spoofing” scheme.

Spoofers use algorithmic trading programs to quickly submit and cancel orders for a stock, creating the illusion of price volatility and false demand or supply. Reynolds estimates Citadel Securities and Virtu Americas created at least 1.4 million fake orders to sell Genius stock during a three-year period, part of a “profound and pervasive” scheme to dupe investors into dumping their shares at a loss.

“The ongoing, repetitive, and continuous nature of defendants’ spoofing activity — which occurred on nearly every trading day during the class period — exerted a prolonged negative effect on the price of Genius’ shares,” Reynolds says in the complaint.

Citadel Securities and Virtu Americas are broker-dealers responsible for executing trades and placing orders for investors while also operating a separate trading business.

In 2017, the Securities and Exchange Commission fined Citadel Securities $23 million for using algorithmic trading to exploit pricing differences in best bid/offer pricing feeds at the expense of customers. In 2023, the company was fined another $7 million for violating short-selling regulations.

Separately, the SEC fined Virtu in 2019 and 2023 for failing to adequately supervise and maintain proper controls while executing trades on behalf of investors.

Genius, which was selling at 18 cents a share on Tuesday, said in a statement it plans to join the class action.

“The company has previously announced that its legal team and experts have identified over $250 million in damages to the company caused by alleged market manipulation,” the company said.

Genius sued Citadel Securities and Virtu Americas in the Southern District of New York in 2025 over similar claims, but the company dismissed that suit Monday after a federal judge refused to appoint it as lead plaintiff in the case.

A spokesperson for Citadel Securities said the new suit was “blatant forum shopping” by plaintiff’s counsel after their loss in the New York case.

Reynolds is represented by Jacob Abrams of Kasowitz LLP in Miami, Abe Alexander of Grant & Eisenhofer P.A. in New York and James W. Christian of Christian Attar in Houston.

Alexander and Attar also represented Genius in its suit.

Reynolds’ suit was filed in South Florida’s federal court. He seeks unspecified damages on two claims of securities fraud and asks to litigate the claims on behalf of a class that includes all investors who bought or sold Genius stock between April 12, 2022, and May 30, 2025.

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