WASHINGTON (AP) — "Fake news" is not limited to presidential politics and conspiracy theories. Investors also have to be on the alert for stock promotions masquerading as unbiased reports online.
Federal regulators have brought civil fraud charges against 27 businesses and individuals for deceiving investors into believing what they were reading on websites were independent, impartial analyses of stocks.
The writers were secretly paid for writing the bullish articles, the Securities and Exchange Commission said Monday.
More than 250 articles had false statements attesting that the writers hadn't been compensated by the companies they were writing about, the agency said in a series of orders and lawsuits.
One writer was said to have used at least nine pseudonyms as well as his own name. One of the phony identities was "an analyst and fund manager with almost 20 years of investment experience."
By law, a company paying someone to publish or publicize articles about its stock must publicly disclose the payments.
"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," Melissa Hodgman, associate director of the SEC's enforcement division, said in a statement.
The SEC also issued an investor alert warning that articles on an investing website that appear to be an impartial source of information or that provide commentary on several stocks may be part of a paid stock promotion that hasn't been disclosed. People should never make an investment based only on information published on an investment research website.
Of the 27 businesses and individuals charged, 17 agreed to settlements calling for penalties and restitution ranging from $2,200 to about $3 million, the SEC said. Cases are pending against the other 10. The 10 companies, stock promotion or communications firms are Lidingo Holdings, CSIR Group, DreamTeam Group, Mission Investor Relations, QualityStocks, Dunedin, Galena Biopharma, ImmunoCellular Therapeutics, Lion Biotechnologies and Lavos.