The Good Samaritans

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The SEC has now issued an Investor Alert regarding "pump and dump" stock promotion schemes in which writers were secretly paid to post hundreds of bullish articles about public companies on financial websites.

INVESTOR ALERT: BEWARE OF STOCK RECOMMENDATIONS ON INVESTMENT RESEARCH WEBSITES

The SEC’s Office of Investor Education and Advocacy is issuing this Investor Alert to warn investors that seemingly independent commentary on investment research websites may in fact be part of paid stock promotion campaigns.

When you read an article on an investment research website, be aware that the article may not be objective and independent. For example, the writer may have been paid directly or indirectly by a company to promote that company’s stock. In some cases, the writer may not disclose compensation received or may go so far as to claim falsely that compensation was not received. Keep in mind that fraudsters may generate articles promoting a company’s stock to drive up the stock price and to profit at your expense.

Stock promotion schemes also may be conducted through social media, investment newsletters, online advertisements, email, Internet chat rooms, direct mail, newspapers, magazines, television, and radio. Be wary if you receive communications (including new posts, tweets, text messages, or emails) promoting a stock from someone you do not know, even if the sender appears connected to someone you know. If a company’s stock is promoted more heavily than its products or services, this may be a red flag of investment fraud.

Microcap stocks, some of which are penny stocks and/or nanocap stocks, may be particularly susceptible to stock promotion schemes and other forms of market manipulation. To learn about red flags of fraud and other risks to consider before investing in microcap stocks, read our Investor Bulletin: Microcap Stock Basics (Part 3 of 3: Risk).

Full Article:
https://investor.gov/additional-resources/news-alerts/alerts-bulletins/investor-alert-beware-stock-recommendations