SEC targets fake stock news on financial websites
By Jonathan Stempel
(Reuters) - The U.S. Securities and Exchange Commission on Monday announced a crackdown on alleged stock promotion schemes in which writers were secretly paid to post hundreds of bullish articles about public companies on financial websites.
Twenty-seven individuals and entities, including a Hollywood actress, were charged with misleading investors into believing they were reading "independent, unbiased analyses" on websites such as Seeking Alpha, Benzinga and Wall Street Cheat Sheet.
The SEC said many writers used pseudonyms such as Equity Options Guru, The Swiss Trader, Trading Maven and Wonderful Wizard to hype stocks.
It said it found more than 450 problem articles, of which more than 250 falsely said the writers were not being paid.
"This is different from the fraud cases that you usually see us bring," Stephanie Avakian, acting director of the SEC enforcement division, said on a conference call.
"Here, we allege that the fraud was in presenting the analysis as impartial," she said. "It was bought and paid for."
Seventeen defendants, including Galena Biopharma Inc (GALE.O: Quote), ImmunoCellular Therapeutics Ltd (IMUC.A: Quote) and Lion Biotechnologies Inc LBIO.O, agreed to pay more than $4.8 million, including fines, to settle, and to refrain from further wrongdoing.
Not all defendants are making payments, and Galena, ImmunoCellular and Lion did not admit wrongdoing. None of the websites was charged. Continued...