Paid Promoters Posing as Journalists
It is always best for investors to do their own research to avoid potential financial losses due to securities fraud. This is true even if they are using reputable financial resources and websites to gather information. It’s not uncommon for these sites to accept articles from outside sources including freelancers, guest writers, media press releases, even the general public on open forums.
Unfortunately, these sites don’t always have the time, staff or resources to vet outside information, particularly if the original sources are also presumed to be reputable. Reputable financial and investment news sources can be targets of securities fraud.
Reputable financial and investment news sources can be targets of securities fraud.
A recent example includes the Detroit-based financial and stock news website, Benzinga, who claims they were among the victims of a recent pump and dump scheme.
In March 2017, Benzinga, along with other reputable financial sites including Motley Fool, Forbes, and Seeking Alpha, unwittingly published articles the US Securities & Exchange Commission alleges were specifically written and distributed to artificially inflate stock prices.
According to the SEC lawsuit, hundreds of articles were written about stocks between 2011 and 2014 that omitted or misled readers about whether the author was paid by a third-party source for the flattering coverage.
It is important to note that none of the sites, including Benzinga or their employees, were charged with any wrongdoing. “Indeed we are the victims as well, as we were unaware that the writers had been compensated for these stories,” Anthony LaVerda, Benzinga’s chief content officer, said in a statement.
Benzinga published only seven of these contrived articles and relies mainly on its internal news team to report on financial and stock news. Furthermore, the content was published in a section specifically designated as an outside resource where anyone could publish. Benzinga also ran a disclaimer.
This case simply highlights the value investors should place on their own due diligence.
For more information from the SEC regarding securities fraud, investment fraud, and investment websites visit: https://investor.gov/additional-resources/news-alerts/alerts-bulletins/investor-alert-beware-stock-recommendations.
If you have any questions related to securities fraud or investment fraud, please contact our law office at 313-334-7767. We have been helping investors recover losses from fraudulent financial advisors for over 20 years. We are located in Detroit and service clients throughout Michigan and beyond!