SEC Targets Seeking Alpha, Benzinga In Crack Down On "Fake News" Pump And Dumps

Tyler Durden's picture

With the recent crackdown on political "fake news", where a handful of media mega-corporations such as Facebook and Google have emerged as the ultimate arbiter of what is real or isn't, in the process unleashing allegations of conflicts of interest, it was only a matter of time before the SEC got the hint and brought the hammer down. That time is now, because as Reuters reports, the SEC on Monday announced a crackdown against "pump and dump" stock promotion schemes in which writers were secretly paid to post hundreds of bullish articles about public companies on financial websites.

Some 27 individuals and entities, including a Hollywood actress (shown below), were charged with misleading investors into believing they were reading "independent, unbiased analyses" on websites such as Seeking Alpha, Benzinga and Wall Street Cheat Sheet.

The SEC said many writers used pseudonyms such as Equity Options Guru, The Swiss Trader, Trading Maven and Wonderful Wizard to hype stocks. It was not immediately clear if bearish "pseudonymous characters" were also responsible for talking down stocks.

While not as pervasive as alleged "fake news" in the political realm, the SEC said had it identified more than 450 problem articles, of which more than 250 falsely said the writers were not being paid.

Unlike traditional cases where the SEC alleges fraud, usually involving trading on inside information, in this case the crackdown is not against improper market information but misrepresentation of conflicts of interest and marketing. 

"This is different from the fraud cases that you usually see us bring," Stephanie Avakian, acting director of the SEC enforcement division, said on the conference call. "Here, we allege that the fraud was in presenting the analysis as impartial," she said. "It was bought and paid for."

As a reminder, our own disclosure policy is summarized as follows: "You should assume that at all times we are so totally just talking our book it would shock and awe you like the unexpected, early-morning arrival of a cluster of BGM-109C Tomahawks" (a warning that has lost some of its irony over the years).

Meanwhile, the SEC said that seventeen defendants including Galena Biopharma, ImmunoCellular Therapeutics and Lion Biotechnologies agreed to pay more than $4.8 million, including fines and restitution, to settle, and to refrain from further wrongdoing. Not all defendants were required to make payments, and Galena, ImmunoCellular and Lion did not admit wrongdoing. None of the websites was charged.

The SEC filed lawsuits against the other 10 defendants in Manhattan federal court. These defendants include Lidingo Holdings LLC, run by Kamilla Bjorlin, 46, an actress from Encino, California who performs under the name Milla Bjorn shown in the photo below...

... and CSIR Group LLC, a New York firm overseen by Christine Petraglia, 49.

Amusingly, the SEC also issued an alert warning investors that articles on investment research websites may not be objective and independent, and that they should never invest based solely on information published there.

And yet, the SEC seems to have no problem with sound "advice" from the big investment bank, such as Morgan Stanley telling its clients the coming rally in the S&P is one they can't afford to miss, as we discussed earlier, citing a quote from the bank's new head of equity research who said, "The end of the cycle is often the best. Think 1999 or 2006-07. In a low-return world, investors cannot afford to miss it."

Morgan Stanley did not go into detail on what would happen if the investors got into the "1999" or "2006-2007" rally and found that the crashes of 2000 or 2008 followed...

As for the named websites, they all said that they use the appropriate disclaimers. Mike Taylor, a Seeking Alpha managing editor, said in an email that its policies "act as a strong deterrent against potential promotions," including documenting "all authors' claims to not having been compensated by third parties."  Benzinga said in an email that it uses a disclaimer to identify articles from outside contributors, and that each "does not represent the opinion of Benzinga and has not been edited."

Of course, the unspoken message is that anyone who buys, or sells, securities based on advice they acquired on some website, no matter how credible, deserves to lose all their money anyway.

The SEC's Case is 17-02540 in Southern District of New York

The SEC's breakdown of the "traders", pseudonyms, promoters, clients and publishing websites is shown below:

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Squid Viscous's picture

what about the PNRA front running you dickheads, it can't be that hard to figure out...

amongst many others,

hedgeless_horseman's picture

 

articles on investment research websites may not be objective and independent

Objective and independent like all of CNBC's "news" stories aired between bank and brokerage commercials, or a different kind of objective and independent?

 

http://www.zerohedge.com/news/2017-01-13/what-can-we-learn-looking-carni...

 

SALES is the total sum of money which we marks spend on buying stocks from the broker/dealers.  WINNINGS is the sum of money that we marks get to keep when we sell our stocks to the broker/dealers.

  

We will refer to as, "OVERHEAD," the total amount of money the broker/dealers pay for all other expenses, such as interest payments on debt, payroll for the licensed broker/dealers, traders, analysts, and software developers, electricity, coffee, cocaine, hookers, campaign contributions to government officials, CNBC advertising, and exchange fees.

  

SALES - (WINNINGS+OVERHEAD) = PROFIT (or LOSS)

 


Pladizow's picture

What about all the YouTube Junior Miner vid's?

johngaltfla's picture

Weird that CNBC never gets charged for their fake news and pump and dump antics.....

JRobby's picture

 Milla Bjorn? Oh yea! I've seen none of her pictures..............

Rockatanski's picture

what the hell is wrong with her lips though? too much silly-cone?

StagStopa's picture

Lol. Yeah. I'm gonna invest on that cunts advice. Haven't seen a cunt yet that has a clue about money, other than how to separate a John from his...

Roxi

 

Ps. Men..you do have another option..

Yog Soggoth's picture

When did the Federal government get to decide what news is? So none of the financial reporters get paid? It is not okay if you don't admit it? This is definately First amendment territory with a possible 4th breach. I am not saying that those blogs are not annoying and usually misleading, but they have a right to exist. These guys need to lawyer up, then they won't have to write fake financial reports to make ends meet.

Manipuflation's picture

Hey HH.  I don't find fault with Seeking Alpha.  Of course it is biased.  I will say that they come out with some pretty good articles.  I enjoy reading most of them.

Not going to fight with Seeking Alpha.  They are our cousins.  

booboo's picture

Who says you can't pay for good press

indaknow's picture

Fake financial news? That can't be right. Unpossible.

Rainman's picture

There are so many scams on the Internet these days....but for $19.95 I can show you how to avoid them

indaknow's picture

Is that fee for avoiding each individual scam? Or all of them. Because if it's for all of them well hurry up and take my money. 

Secret Weapon's picture

I would buy your advice but I am too busy making $7,000 per month working part time in my parents basement. 

Mr. Schmilkies's picture

That's right, SEC, go after the little guys and show 'em how tough you are.  And we can't have anyone moving in on the big players we all know and love, right?

Davidduke2000's picture

I hope CNBC is on the list

biker's picture
biker (not verified) Apr 10, 2017 4:41 PM

Funny, they go after the patsies making a few small bucks (pennies), instead of the international corporations profiting TRILLIONS&trillions from the fake.

FUCK YOU

Colonel Klink's picture

Blind and toothless SEC avoiding going after the (((real crooks))).  Meet the new boss, same as the old boss.

wmbz's picture

 "SEC enforcement division" 

What a bunch punk-tard candy asses! Go after the real fucking theives you useless bastards. Of course you know you won't because they own your sorry ass. Just try it once rasin nuts. The fucking SEC is just anouther waste of tax dollars. Assholes all! 

Friedrich not Salma's picture

I had something profound to add but then I scrolled to that upper lip and forgot everything. Gahhhhhh!

SloMoe's picture

WTF is wrong with that chick's lips? Talk about pump and dump...

bobbbny's picture

They've gotta be good for something.
Hmmmmm.....

earleflorida's picture

not a whisper about gs backed scumbage 'motley fool'

bobbbny's picture

"This is different from the fraud cases that you usually see us bring,"

Huh? I don't understand.

SloMoe's picture

Is Cramer and CNBC on the list?

bobbbny's picture

Forgot to ask, Is Cramer on that list?

roisaber's picture

too little too late... but it's still a little funny.

Squid Viscous's picture

yeah ...this guy Vinny Cheesano on Seeking Alpha convinced me to buy a shit ton of IMADIK.pk

please get him SEC, my heros!!!

orangegeek's picture

about time - full of shit sites for suckers

Chippewa Partners's picture

They won't lift a finger to root out  quote stuffing, flash trading, packet churning, layering, sub-pennying, liquidity, latency and dark pool arbitrage, NBBO and Reg NMS exemptions, "hide-not-sliding" and collocation among other things.


But some measly pump n dump internet site gets the first degree...........amazing isn't it?  
Rebel yell's picture

Maybe the SEC would impress people if they went after the too corrupt to succeed banks instead, or if they refused the IPO of companies that have no source of income essentially legalizing blue sky stocks like Snapchat.

Chris88's picture

The SEC isn't supposed to comment on whether an investment sucks (they wouldn't know that's why they work for the government), just whether the submitted information is complete. Investors dumb enough to buy Snapchat deserve to lose money.  

Chris88's picture

If you're dumb enough to have taken advice from any amateur hour website you deserve to lose money.

Manipuflation's picture

Seeking Alpha has some good writers and some douches.  I won't name names.  The SEC should fuck off.  I am a member there as well but I don't post there because I belong here.  Plus the posters might actually know what they are talking about.  I know PM's but I like to read about other things once in a while.  Who is next?  Motley Fool?.  Yahoo finance?

 

 

Chris88's picture

SA is a joke, we sometimes crowd around a screen at the fund to pull up articles and comments on there to laugh.  Great contrarian indicator.

dondonsurvelo's picture

I have made great money on the advice of certain writers on Seeking Alpha. 

zagzigga's picture

No action against Musk for constantly pimping Tesla stock price?

Versengetorix's picture

Ahhh yes.  Is this the same SEC that went fishing Goldman Sachs raided the US Treasury and then decided that America's biggest financial thrat was Martha Stewart?

Tortuga's picture

LOL!!!!

"This is different from the fraud cases that you usually see us bring," Stephanie Avakian," SEC (choke, snort, cough) something to do with enforcement; on Mondays, VP.

LOL! "enforcement". LOL x's 2.......

whatamaroon's picture

I made a bet with a SA energy author -Micheal Fitzsimmons- years ago about global warming being a scam. Fucker welched on the case of beer bet!

El Hosel's picture

Me a bjorn to backstroke..... SEC so bored they are doing their job, wilst Mia does everybody else.

Lorca's Novena's picture

My God, going after low hanging fruit....  They need to start with shutting down every fucking financial teevee show first, then the whole town of clearwater florida...