Be forewarned: “When you read an article on an investment research website, be aware that the article may not be objective and independent.”

The SEC broke major ground last week in a crackdown on “fake news,” taking action against 27 web sites and individuals for publishing stories “touting company stocks” that were produced by writers “secretly compensated” to boost the shares. This is “fake news” with real consequences, and you as a reader need to be wary.

The Skinny has never been a fan of a growing trend within web publishing called “sponsored content.” That’s where companies pay to have articles published.

At WRAL TechWire, we insist that such content if offered is subject to OUR editorial control – or its not published. No advetorials. Period.

However, across the web, content standards have plunged as more and more web sites – desperate for content in search of “uniques” (readers) and page views – publish a lot of garbage.

Fake news really received attention – at last – during the 2016 political campaign. And while the SEC action didn’t target fake news in terms of trumped up claims and clintonian conspiracies the settlements announced last week will hopefully send a tremor through websites that are tempted to cross the line for stock advocacy rather than unbiased reviews.

The SEC also issued a warning, which we repeat here in full. The headline was in all caps as published.


“The SEC’s Office of Investor Education and Advocacy is issuing this Investor Alert to warn investors that seemingly independent commentary on investment research websites may in fact be part of paid stock promotion campaigns.

“When you read an article on an investment research website, be aware that the article may not be objective and independent. For example, the writer may have been paid directly or indirectly by a company to promote that company’s stock. In some cases, the writer may not disclose compensation received or may go so far as to claim falsely that compensation was not received. Keep in mind that fraudsters may generate articles promoting a company’s stock to drive up the stock price and to profit at your expense.

“Stock promotion schemes also may be conducted through social media, investment newsletters, online advertisements, email, Internet chat rooms, direct mail, newspapers, magazines, television, and radio. Be wary if you receive communications (including new posts, tweets, text messages, or emails) promoting a stock from someone you do not know, even if the sender appears connected to someone you know. If a company’s stock is promoted more heavily than its products or services, this may be a red flag of investment fraud.

“Microcap stocks, some of which are penny stocks and/or nanocap stocks, may be particularly susceptible to stock promotion schemes and other forms of market manipulation.”

The crackdown

The SEC declared in its news about the crackdown at “Payments for Bullish Articles on Stocks Must Be Disclosed to Investors”

Those bullish articles give new meaning to bull [bleep].

The SEC called the articles as “various alleged stock promotion schemes that left investors with the impression they were reading independent, unbiased analyses on investing websites while writers were being secretly compensated for touting company stocks.”

The government agency noted that “public companies hired promoters or communications firms to generate publicity for their stocks, and the firms subsequently hired writers to publish articles that did not publicly disclose the payments from the companies. The writers allegedly posted bullish articles about the companies on the internet under the guise of impartiality when in reality they were nothing more than paid advertisements. More than 250 articles specifically included false statements that the writers had not been compensated by the companies they were writing about, the SEC alleges.”

This really is outrageous.

Readers, beware.

“For example, one writer wrote under his own name as well as at least nine pseudonyms, including a persona he invented who claimed to be ‘an analyst and fund manager with almost 20 years of investment experience.,'” the SEC noted.

“One of the stock promotion firms went so far as to have some writers it hired sign non-disclosure agreements specifically preventing them from disclosing compensation they received.”

Caught up in the scandal were:

  • three public companies
  • seven stock promotion or communications firms
  • two company CEOs
  • six individuals at the firms
  • nine writers

So far, 17 have reached settlements ranging from $2,200 to $3 million.

Another 10 cases are continuing.

Here’s a final warning:

“Stock promotion schemes may be conducted through investment research websites,” said Lori Schock, Director of the SEC’s Office of Investor Education and Advocacy. “Investors looking for objective investment information should be aware that fraudsters may use these websites to profit at investors’ expense.”

Read more at:

Read the SEC alert at: