Google and other sites have discussed ways to handle stories suggesting Hillary Clinton has horns, Donald Trump has a tail, and Barack Obama was born on the planet Krypton.
But the Securities and Exchange Commission (SEC) has now turned its attention to another type of fake news that is actually more dangerous to consumers.
Believing fake news stories about political figures might make you dumber, but it won't take money out of your pocket. But believing fake news planted on financial news sites most assuredly will.
27 individuals and companies charged
This week the Securities and Exchange Commission (SEC) sued 27 individuals and companies, charging they took money in exchange for planting favorable articles about certain stocks on some financial and investment websites.
The suit charges it was a play on the old-fashioned "pump and dump" schemes, where an operator buys huge amounts of a penny stock, proclaims it is about to surge in price, then sells it when enough buyers jump on it and push up the price.
The suit charges various publicly traded companies were in on the scheme, paying promoters to plant articles that purported to be unbiased and objective, when in reality they were nothing more than paid advertisements.
Investigators say writers lied
SEC investigators said they documented more than 250 instances where writers falsely declared they had not been compensated by the companies they were writing about.
“If a company pays someone to publish or publicize articles about its stock, it must be disclosed to the investing public," said Stephanie Avakian, Acting Director of the SEC’s Division of Enforcement. "These companies, promoters, and writers allegedly misled investors by disguising paid promotions as objective and independent analyses.”
The complaint alleges that the parties took elaborate measures to conceal the true nature of the stock-touting articles. For example, the SEC said it found one writer published articles under his own name, as well as under at least nine pseudonyms. In one profile, the SEC says this writer claimed to be “an analyst and fund manager with almost 20 years of investment experience.”
Three publicly traded companies charged
The SEC says it has filed charges against three public companies and two CEOs. Seven stock promotion or communications firms, six individuals at the firms, and nine writers also face fraud charges.
The SEC also released an investor alert warning, cautioning consumers and investors that articles on an investment research website that appear to be an unbiased source of information or provide commentary on multiple stocks may not be what they seem.
The best policy is not to rely on a single source for information about a company or stock. It always pays to do plenty of research and seek guidance from a trusted, objective advisor.