Investors, beware: Hundreds of articles on websites that track stocks may not be what they seem.
The SEC on Monday announced charges against 27 individuals and businesses for schemes in which writers were allegedly paid in secret to promote the stocks of public companies.
The ploys "left investors with the impression they were reading independent, unbiased analyses on investing websites while writers were being secretly compensated for touting company stocks," the SEC said in a press release.
The stories were posted on a number of well-known websites, including Seeking Alpha, Benzinga, The Motley Fool, TheStreet and Forbes, the SEC said in a complaint. None of these publications immediately responded to a request for comment.
According to the SEC, public companies would hire PR groups to drum up buzz around their stock performance. These firms would then hire writers who would write bullish pieces -- all while pretending to be impartial.
"More than 250 articles specifically included false statements that the writers had not been compensated by the companies they were writing about," the SEC alleged.
One writer used at least nine pseudonyms in addition to his real name, according to the SEC. Under one alias, he falsely claimed to be "an analyst and fund manager with almost 20 years of investment experience."
The SEC has deemed the problem widespread enough to merit a formal warning to investors.
"When you read an article on an investment research website, be aware that the article may not be objective and independent," the SEC said in an investor alert posted online. "... Never make an investment based solely on information published on an investment research website."
Seventeen of the parties that were charged have agreed to settlements. Their fines range from $2,200 to nearly $3 million.