The US securities watchdog has issued a series of fines and penalties to individuals and entities for submitting hundreds of articles to financial websites which purported to be impartial endorsements of certain companies but which were secretly paid-for
The Securities and Exchange Commission (SEC) charged 27 offenders, including a Hollywood actress, for misleading investors into believing they were reading "independent, unbiased analyses" on websites such as Seeking Alpha, Benzinga and Wall Street Cheat Sheet.
The SEC identified more than 450 questionable articles, 250 of which falsely stated that the writers were not paid. Seventeen of the defendants were hit with fines of more than $4.8 million, while the remaining ten defendants await their fate. The latter group includes Kamila Bjorlin, otherwise known as actress Mila Bjorn, who last year appeared in the film Misconduct, a drama about corporate fraud at a pharmaceutical company.
The SEC has also issued a warning to investors that not all articles they read on financial websites may be objective. "This is different from the fraud cases that you usually see us bring," Stephanie Avakian, acting director of the SEC enforcement division, stated in a conference call to reporters "Here, we allege that the fraud was in presenting the analysis as impartial," she said. "It was bought and paid for."
Meanwhile, a managing editor at Seeking Alpha, defended the website's policies and documenting of all authors' claims of impartiality as a "strong deterrent against potential promotions".