Tyler Durden Blog | SEC Targets Seeking Alpha, Benzinga In Crack Down On "Fake News" Pump And Dumps | Talkmarkets
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Tyler Durden (pseudonym) is the lead writer at ZeroHedge.  Tyler represents the idea that a return to truly efficient markets is a possibility and a necessity.

After having experienced the inner workings of capitalism at various ... more

SEC Targets Seeking Alpha, Benzinga In Crack Down On "Fake News" Pump And Dumps

Date: Monday, April 10, 2017 4:24 PM EDT

Summary: The SEC is cracking down on "pump and dump" stock schemes where writers were secretly paid to post bullish articles on financial websites such as Seeking Alpha. Investors were mislead into believing they were reading "independent, unbiased analyses."

With the recent crackdown on political "fake news", where a handful of media mega-corporations such as Facebook and Google have emerged as the ultimate arbiter of what is real or isn't, in the process unleashing allegations of conflicts of interest, it was only a matter of time before the SEC got the hint and brought the hammer down. That time is now, because as Reuters reports, the SEC on Monday announced a crackdown against "pump and dump" stock promotion schemes in which writers were secretly paid to post hundreds of bullish articles about public companies on financial websites.

Some 27 individuals and entities, including a Hollywood actress (shown below), were charged with misleading investors into believing they were reading "independent, unbiased analyses" on websites such as Seeking Alpha, Forbes, Benzinga, Investing.com, Investors Hub, Minyanville, 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 was not immediately clear if bearish "pseudonymous characters" were also responsible for talking down stocks.

While not as pervasive as alleged "fake news" in the political realm, the SEC said had it identified more than 450 problem articles, of which more than 250 falsely said the writers were not being paid.

Unlike traditional cases where the SEC alleges fraud, usually involving trading on inside information, in this case the crackdown is not against improper market information but misrepresentation of conflicts of interest and marketing. 

"This is different from the fraud cases that you usually see us bring," Stephanie Avakian, acting director of the SEC enforcement division, said on the conference call. "Here, we allege that the fraud was in presenting the analysis as impartial," she said. "It was bought and paid for."

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