Craig is accused of creating two Twitter profiles impersonating Citron Research and Muddy Waters Research to manipulate two companies stock prices.

US security regulators have brought fraud charges against a Scottish stock trader who allegedly created fake Twitter profiles and used them to cause price swings in two companies allowing him to profit from the fluctuations.

According to the Securities and Exchange Commission, James Alan Craig of Dunragit, Scotland, in 2013 created two Twitter accounts made to look like the real accounts of two well-known short selling groups. Craig created Twitter accounts that appeared to belong to research firms Muddy Waters Research and Citron Research, under the Twitter handles @Mudd1Waters and @citronresearc whilst using the logos of both companies.

He then “tweeted multiple false statements” stating two companies were under investigation causing the share price of Audience Inc to fall by 28 percent and Sarepta Therapuetics to fall 16 percent.

“As alleged in our complaint, Craig’s fraudulent tweets disrupted the markets for two public companies and caused significant financial losses for their investors,” said Jina Choi, director of the SEC’s San Francisco Regional Office.

Despite the stock prices moving by relatively large percentages, the SEC said Mr Craig’s efforts to buy and sell shares for profit were “largely unsuccessful”.

Ms Choi also noted “Craig also said in later tweets that the SEC would have a hard time catching the perpetrator. As today’s enforcement action demonstrates, those tweets turned out to be false as well.”

He is accused in both cases of using his girlfriend’s trading account to purchase the shares in the companies which were later sold on at a higher price.

The SEC’s indictment seeks a permanent injunction against future violations in addition to issuing a fine to Mr Craig.