A. This matter involves an employee of an investor relations firm, who touted stock on an Internet bulletin board without disclosing that he was being compensated for the posts by his employer. This employee, the respondent in this proceeding, failed to disclose that he was promised thousands of shares of stock as a bonus for assisting his employer in promoting the stock of Snelling Travel, Inc. ("SNLV"), which is quoted on the over-the-counter bulletin board. The respondent's failure to disclose this remuneration was fraudulent, and in violation of Section 17(b) of the Securities Act, which makes it unlawful for any person to tout stocks for consideration without fully disclosing the consideration.
The disclosure requirement imposed by Section 17(b) is thus reasonably 'related to the goal of fraud prevention. A publicist who fails to disclose that he has an interest in the companies he promotes will almost always mislead his audience into thinking that his advice is disinterested. Similarly, we are influenced by the fact that the disclosure requirement applies only to those securities that a promoter has been paid to tout. The fact that the promoter must provide a disclaimer as to each security he touts at the time he promotes the security is only a minimal burden imposed by the statute.
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