Twin brothers in the U.K. allegedly defrauded about 75,000 investors by telling them a stock-picking robot named "Marl" could identify penny stocks that would double in price while the brothers were simply listing stocks they were paid to promote, the U.S. Securities and Exchange Commission charged on Friday.

The brothers, Alexander John Hunter and Thomas Edward Hunter, began the scheme in 2007 when they were just 16 years old, the SEC said. They sent out email newsletters through a pair of websites they created to promote Marl the Robot. The websites touted "stocks selected by the robot," which they alleged was the product of substantial research and development, the SEC said.

"Their claims were persuasive as the Hunters received at least $1.2 million from investors primarily in the U.S. who paid $47 apiece for annual newsletter subscriptions. Some investors paid an additional fee for the 'home version' of the robot software," the SEC charged.

Although the duo did not claim to have a secret Marl the Robot R&D lab buried deep within the bowels of an active volcano, they did claim "they could 'rocket' a stock's price and increase its volume" on a third website, which they used to offer their services as stock promoters, according to the SEC.

Known or suspected stock promoters paid the Hunter brothers at least $1.865 million in fees to list stocks in their supposedly robot-powered newsletter, the SEC said. The twins did not disclose this conflicting line of business to their newsletter subscribers (presumably because the stock recommendations were supposed to be coming from a robot).

"The Hunters used the anonymity of the Internet and the promise of easy riches to prey on investors. While touting their supposed breakthrough investment technology on two websites, the Hunters were racking up fees as stock promoters through a third," said Thomas A. Sporkin, chief of the SEC's Office of Market Intelligence.

The SEC filed its Marl the Robot fraud complaint against the Hunter brothers in the U.S. District Court of the Southern District of New York. In the filing, the SEC charged the brothers' websites Doublingstocks.com and Daytradingrobot.com falsely claimed that "a former trading algorithm programmer from a large investment bank had designed a stock picking robot that they named 'Marl,'" which purportedly picked penny stocks for their newsletters.

The Hunters allegedly used a third website, Equitypromoter.com, "where they marketed their newsletter subscriber list to penny stock promoters," who paid the brothers to promote their stocks as the picks of Marl the Robot.

According to the SEC, the Hunters sent the newsletter at the beginning of the trading day, and "the price and volume of the promoted stocks spiked dramatically as newsletter subscribers rushed to purchase shares. However, the stocks typically fell precipitously shortly thereafter, leaving investors with shares worth less than they had purchased them for earlier in the day."

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