Compliance
SEC Scolds Firms Running Stock-Pumping Schemes

The US' most prominent regulator is clamping down on schemes that ultimately mislead the common investor.
A US regulator has unveiled a plethora of schemes involving
companies paying writers to promote their stocks online,
demonstrating the challenges watchdogs face policing “fake news”
that often misleads investors.
The Securities
and Exchange Commission earlier this week announced it had
taken enforcement action against 27 individuals and entities
behind stock promotion schemes that led investors to
believe they were reading independent, unbiased analyses on
investing websites, even though writers were secretly being paid
to tout company stocks.
The SEC said more than 250 articles included false statements
that writers were not compensated for by the companies they wrote
about.
As a result, the US' most prominent financial watchdog has ruled
that if a company pays for bullish articles on stocks, it must be
disclosed to the public.
“Deception takes many forms,” said Melissa Hodgman, associate
director of the SEC's enforcement division. “Our markets cannot
operate fairly when there are deliberate efforts to reach
prospective investors with positive articles about a stock while
hiding that the companies paid for those articles.”
The SEC has filed fraud charges against three public companies
and seven stock promotion or communications firms, as well as two
company chief executives, six individuals and nine writers. The
regulator did not provide details about the entities involved,
however.
Of those charged, 17 have agreed to settlements that include
penalties ranging from $2,200 to nearly $3 million on a
case-by-case basis. Litigation continues against 10 others, the
SEC says.
“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.”