Freedom of speech may protect propagators of falsehoods like the “Bowling Green massacre” and a fictitious attack at a Washington, D.C., pizzeria, but the Securities and Exchange Commission drew a line Monday when it took action against 27 companies and individuals for allegedly promoting the promise of their stocks or receiving secret compensation while masquerading as unbiased market reporters.
Of the defendants facing legal action for the upwards of 250 finance articles that included false statements saying their authors were not compensated for their supposedly unbiased stock performance predictions, 17 paid settlements ranging from $2,200 to nearly $3 million, according to an SEC press release. Ten others faced lawsuits in Manhattan’s federal district court.
The materials included work published on Seeking Alpha, Benzinga, The Motley Fool, Minyanville, Yahoo Finance, TheStreet, Forbes, Small Cap Network, Market Playground, Investor Village and Wall Street Cheat Sheet, the news site Axios reported.
The charges named nine writers, one of whom was falsely described on the publishing site as an analyst and fund manager with almost 20 years of investment experience” and several of whom even signed non-disclosure agreements keeping them from admitting to receiving compensation, according to the SEC.
Also among the defendants were the companies Lion Biotechnologies Inc., ImmunoCellular Therapeutics Ltd. and Galena Biopharma Inc. — all three of which, Reuters reported, did not admit to wrongdoing. Two company CEOs also faced charges, as did Swedish actress Kamilla Bjorlin, president of Lidingo Holdings LLC, which, the SEC alleges, secretly paid writers to promote the stocks of one of the firms facing a separate charge.
“If a company pays someone to publish or publicize articles about its stock, it must be disclosed to the investing public,” the SEC’s acting director of enforcement, Stephanie Avakian, said in the release. “These companies, promoters, and writers allegedly misled investors by disguising paid promotions as objective and independent analyses.”