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Regulatory Sanctions

Biased Equity Research at SeeThruEquity - SEC

November 28, 2018

by Howard Haykin


According to the SEC, transparency was not a strong point at SeeThruEquity LLC, where research was generated on a “pay to play“ basis and improper trading frequently occurred.


The SEC charged a stock research firm and its co-founders with defrauding investors by issuing reports purportedly based on “unbiased” and “not paid for” research when in reality they received thousands of dollars from issuers as a condition to providing each report.


SEC FINDINGS.    SeeThruEquity LLC and its co-founders, brothers Ajay and Amit Tandon, camouflaged the payments by inviting companies to make a “presentation” at an investor conference in order to receive a research report for free. SeeThruEquity collected up to several thousand dollars in conference presentation fees per company, and then the issuers regularly had input into the substance of the supposedly unbiased research reports, even including the price targets at times.


The Tandons often instructed SeeThru analysts to use different, higher price targets for covered issuers than those yielded through purported quantitative analysis – such that price targets contained in SeeThru’s reports were typically more than 300% above the current trading price of the stock.


The SEC further charged Ajay Tandon, who serves as CEO, with: (i) frequently trading in the same stocks that SeeThru was evaluating; and, (ii) engaging in scalping - a form of securities fraud that occurs when a perpetrator makes a stock recommendation to investors and contemporaneously trades against that very recommendation in the open market without adequate disclosure.


FIRM PROMOTIONALS.    On Twitter, SeeThruEquity describes itself as a “Leading unbiased equity research and corporate access firm focused on smallcap and microcap companies. The firm has issued 485 tweets and has 3,787 followers.


On LinkedIn, SeeThruEquity describes its core mission as … providing impactful, high quality research on underfollowed smallcap and microcap equities. SeeThruEquity has pioneered an innovative business model for equity research that is not paid for and is unbiasedThe firm further notes that it is approved to contribute its research reports and estimates to Thomson One Analytics (First Call), the leading estimates platform on Wall Street, as well as Capital IQ and FactSet. [Financialish:  A scary prospect, if the allegations are true.]


[For further details, click here to access the SEC COMPLAINT.]