In April 2023, Getty rejected a $4 billion takeover bid from Massachusetts-based investment firm Trillium Capital, categorizing the acquisition attempt as insufficiently credible. Now, federal investigators describe the failed takeover as a “pump and dump” scheme and have charged Trillium and its CEO with securities fraud.
The Securities and Exchange Commission (SEC) filed a lawsuit against Trillium and its CEO, Robert Scott Murray, in the United States District Court for the District of Massachusetts on Friday, May 31, calling Trillium’s Getty acquisition effort a “fraudulent scheme” to “manipulate and artificially increase the stock price for Getty Images Holdings Inc.”
At the time of Trillium’s alleged crime, it offered to purchase Getty for $10 per share in cash, nearly double the stock’s previous closing price. Federal regulators allege that Trillium would have sold these newly acquired Getty shares and options into the artificially inflated market. For reference, Getty’s stock is trading at $3.64 per share at the time of publication.
In the seven months before Murray’s acquisition attempt, he spent over $1.6 million to purchase 299,350 Getty shares and an additional million dollars on Getty option contracts. At Murray’s peak, he owned over 12% of Getty’s public stock float not owned directly by Getty affiliates.
The lawsuit claims that in early April 2023, Murray and Trillium published four press releases that the SEC says were designed, at least in part, to increase Getty’s stock price. These press releases publicly urged Getty to explore selling and pleaded for Murray to get a seat on Getty’s board.
Trillium’s initial efforts weren’t working as intended. As the SEC describes, “By mid-April, Murray was facing growing losses on his Getty investment and devised what he called his ‘new plan’: Murray would claim that Trillium was seeking to take over Getty with a conditional cash price offer at a significant premium. Murray expected Getty’s stock price and trading volume to spike on the news, allowing him to unload his Getty stocks and options.”
This proposed purchase would have required nearly $4 billion in cash, although as the SEC describes, Trillium’s brokerage accounts at the time had just $17.32. Murray’s personal accounts had around $13 million at the time. As the SEC explains, “even with Trillium’s $17.32,” Murray lacked the resources to carry out his plans.
However, even though the proposal has all the makings of a sham, it did achieve Murray’s aims, leading to a rapid, albeit small, surge in Getty’s stock price and trading volume. Murray then began dumping his shares and options. The SEC believes that Murray’s frenzied trading illustrates that Trillium’s offer was never genuine.
“Murray claimed that his buyout proposal could create real value for Getty shareholders,” says Mark Cave, Associate Director in the SEC’s Division of Enforcement. “But we allege that, in the end, Murray leveraged his professional credentials to orchestrate an old-fashioned pump-and-dump scheme, disguised as shareholder activism.”
Murray and the SEC have reached a partial resolution to permanently ban Murray from serving as an officer or director of a public company and bar him from engaging in certain securities-related conduct. The lawsuit will proceed, with the courts determining the amount of disgorgement required and any civil penalties Murray may face.
Alongside the SEC’s complaint, the U.S. Attorney’s Office for the District of Massachusetts has announced criminal charges against Murray.
Image credits: Header photo created using assets licensed via Depositphotos.
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