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Regulatory Sanctions

SEC Cracks Down on Fake Stock Tip Posts

April 11, 2017

The SEC took enforcement actions against 27 individuals and entities behind various alleged stock promotion schemes. In each case, writers allegedly posted bullish articles about companies on the internet that appeared to be objective and impartial but were, in reality, nothing more than paid advertisements. 


SEC investigators uncovered alleged scenarios in which public companies hired promoters or communications firms to generate publicity for their stocks, and those firms hired writers to publish articles that did not publicly disclose the payments from the companies.  More than 250 articles specifically included false statements that the writers had not been compensated by the companies they were writing about.


  • One writer wrote under his own name as well as at least 9 pseudonyms, including a persona he invented who claimed to be “an analyst and fund manager with almost 20 years of investment experience.” 
  • 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.


All told, fraud charges were filed against: 3 public companies;  7 stock promotion or communications firms;  2 company CEOs;  6 individuals at the firms;  9 writers. 


Of those charged, 17 have agreed to settlements that include disgorgement or penalties ranging from approximately $2,200 to nearly $3 million based on frequency and severity of their actions.  SEC litigation continues against 10 others.