SEC cracks down on stock ads presented as news articles

SEC cracks down on stock ads presented as news articles
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The Securities and Exchange Commission (SEC) filed charges Monday against more than two dozen businesses and individuals that produced sponsored articles promoting stocks that were presented as unbiased, objective analysis.

The SEC filed fraud charges against three public companies, seven public relations firms, two executives, six individuals and nine writers, the agency announced Monday. All are alleged to have helped plant positive stories about stocks on popular financial news websites without revealing that the articles were actually advertisements paid for by the traded company.

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The articles often hid the authors’ names behind exaggerated aliases, claiming to be mysterious stock experts from around the world. One firm even required writers to sign nondisclosure agreements barring them from revealing how much money they received for each article.

“Deception takes many forms. Our markets cannot operate fairly when there are deliberate efforts to reach prospective investors with positive articles about a stock while hiding that the companies paid for those articles,” said Melissa Hodgman, associate director of the SEC’s enforcement division.

The SEC said 17 of the 27 charged have settled, paying penalties between $2,200 and nearly $3 million.