COMPENSATION DISPENSATION
Touts are required to disclose their compensation and name their benefactors within their promotional materials. Many refuse to do so, thereby blatantly breaking the law. Others will outright lie and claim that they were not compensated for their work. Still others will overstate their compensation in order to give the appearance of a massive promotional effort thereby lending hope to an extended campaign. This type of ruse has proven very effective in the past with claims of $2 million dollar promotional campaigns. One would have to question how a company with a few hundred dollars in the bank would expect to pay for a $2 million dollar promotion if it was not by selling stock. Furthermore, a reasonable person would question whether that two million dollars would not have been better spent on executing the company's purported line of business.
The most common form of compensation disclosure fraud is the "Third Party" con. Insiders hide their intent to sell stock by having some third party hire the tout, thus leaving the insiders free to claim innocence and lack of knowledge of any pump and dump scheme. They will sometimes even take the step of deflecting responsibility by issuing a press release refuting the promotion, deeming it "unauthorized" and claiming that it has no knowledge as to who the perpetrators of the campaign might be. This often occurs after an inquiry by the SEC or other regulatory body.
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