Yesterday, the SEC filed charges against a slew of business news publications for “fraudulent promotion of stocks.” And we’re not talking some rinky dink LiveJournal blogs — these were big, respected sites like Seeking Alpha, Forbes, TheStreet, Yahoo Finance, and The Motley Fool.
The organization found 250 articles with bullish predictions about biotech stock falsely claiming that the authors were unpaid by the industry when, in fact, the companies had paid contributors for their favorable analyses.
Thus far, the SEC’s settled with 17 out of 27 entities, slapping them with fines as much as $3m for a total of $4.8m in penalties.
So, how much did these publications know?
Apparently, not much. But that doesn’t mean they’re not responsible for spreading propaganda.
As many writers can attest, contributor posts are a bit of a wild west with regards to editorial oversight.
Despite the disclaimer that they were unsponsored, many of the articles in question were published without any editorial review, from authors like “Equity Options Guru,” “Trading Maven,” and “Wonderful Wizard.”
Moral of the story: Don’t invest money based on one blog article
The SEC is warning investors not to make financial decisions based solely on articles they find on investment research websites. Especially those written by someone who refers to themselves as a wizard.