Sunday, July 29, 2018 09.38AM / The US SEC’s Office of Investor Education and Advocacy / TheAnalyst
Being an adaptation by TheAnalyst of a US SEC’s IEA article titled: BEWARE OF STOCK RECOMMENDATIONS ON INVESTMENT RESEARCH WEBSITES 04/10/2017. Picture source however is from the Parent Voice
This Investor Alert has been issued as a guide/warning to investors that seemingly independent commentary on investment research and news websites may in fact be part of paid stock promotion campaign. The Office of Investor Education and Advocacy has provided this information as a service to investors. It is neither a legal interpretation nor a statement of SEC policy.
When you read an article on an investment research website, be aware that the article may not be objective and independent. For example, the writer may have been paid directly or indirectly by a company to promote that company’s stock.
cases, the writer may not disclose compensation received or may go so far as to
claim falsely that compensation was not received. Keep in mind that
fraudsters may generate articles promoting a company’s stock to drive up the
stock price and to profit at your expense.
Stock promotion schemes also
may be conducted through social media, investment newsletters, online
advertisements, email, internet chat rooms, direct mail, newspapers, magazines,
television, and radio. Be wary if you receive communications (including
new posts, tweets, text & WhatsApp messages, or emails) promoting a
stock from someone you do not know, even if the sender appears connected to
someone you know. If a company’s stock is promoted more heavily than
its products or services, this may be a red flag of investment fraud.
stocks, some of which are penny stocks and/or nanocap stocks, may be
particularly susceptible to stock promotion schemes and other forms of market
SEC Enforcement Actions - The SEC has taken enforcement action against companies and individuals for generating deceptive articles on investment research websites (we could not find evidence of this in Nigeria, especially given the lessons of 2006-2009).
The US SEC recently charged 27 parties – including public companies, firms, and writers – with fraud for generating articles that promoted certain stocks when some or all of the writers allegedly:
Before investing in a particular stock, research the company thoroughly and make sure you understand its business. As with any investment decision, carefully review all of the materials available to you and if possible, verify what you are told about the investment.
Examples of Stock Picks On Proshare
At www.proshareng.com, stock picks published on our site are done without any compensation and are indeed researched, authored, produced and made available for publishing by licensed fund managers under an service level agreement (SLA). As part of our editorial policy, we emphasize a conscious best effort to disclose paid-for information on the platform such as news (marked as press release), commentary, coverage report or review where the subject entity is a paying client for related or unrelated services; whether commercial or CSR.
You can spot these disclosures in the following ways:
• In all news post, we disclose along with the date (beneath the title); the originating source(s) indicating specifically the name of the firm/author and nature of piece.
• Look out for these additional tags - Guest Post, Op-Ed, Sponsored Post, Partner.
• We generally have signed advert agreements (for In-News and banners) which excludes the analyst function’s independence.
• We disclose listed entities we have worked for and work with in our corporate profile.
To learn more about this and about red flags of fraud (follow our Frauds & Scandals page) and for other risks to consider before investing in stocks, (contact our Investor Relations Services via firstname.lastname@example.org or/and Share support services team via email@example.com) or simply call 0700 – PROSHARE. Our contact details are: Proshare Nigeria, The Upper Room, Plot 590b, Lekan Asuni Close, Omole Phase 2, Isheri LG, Lagos. P. O. Box 18782, Ikeja, Lagos State. General E-mail: firstname.lastname@example.org
If you have questions concerning the meaning or application of a particular law or rule, please consult with your fund manager or an attorney who specializes in securities law.
Additionally you can contact the following entities about the background of a company or fund manager, including registration or license status of anyone involved in recommending or selling an investment; viz: