|To: Tim Lento who wrote (1490)||6/12/2013 6:56:43 AM|
| SEC halts Polar Petroleum after on-line touting|
2013-06-11 13:22 ET - Street Wire
Also Street Wire (U-*SEC) U.S. Securities and Exchange Commission
Also Street Wire (U-POLR) Polar Petroleum Corp
This item is part of Stockwatch's value added news feed and is only available to Stockwatch subscribers. Here is a sample of this item: by Mike Caswell
The U.S. Securities and Exchange Commission has halted Polar Petroleum Corp., an OTC Bulletin Board company that went to $5.99 from 99 cents in a one-month span. (All figures are in U.S. dollars.) The SEC cites questions about promotional materials and the accuracy of the company's news. Although the regulator provides few specifics, it is likely referring at least in part to a tout sheet that listed a $27 price prediction for the stock.
The halt notice comes just four months after Polar Petroleum started calling itself an oil and gas company, when it acquired leases in Alaska. It had previously been a thinly traded shell, with an office in Edmonton. Within weeks of acquiring the leases, the stock started trading heavily, reaching a $5.99 high on May 14 with volume that day of over 1,003,186 shares.
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It is called 'shock and awe'...and yes, sometimes the promo program works for a few weeks - until the Heat comes a-knocking at your door.
Posted by Phatter Dean at 2013-06-11 13:30
unloading 400K a day at $5 when the company isn't likely worth 5c is good if you can get it.
Posted by ron at 2013-06-11 16:16
thought this was the deal that John Kaiser was touting to be a takeover target and could have a CDN$70 evaluation with drilling in northern BC, that copper deal, that Kaiser was touting a $2 to $70 number on....guess kaiser has a priest or 2 in his back pocket so its ok?
Posted by burp at 2013-06-11 17:54
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|From: StockDung||6/15/2013 1:31:13 PM|
| Microcap stocks get undeserved promotions|
by contributor Bill Meagher | Published June 14, 2013 at 3:06 PM
Direct mail and e-mail campaigns have long been the staple of paid promotions of microcap stocks, but in recent months stock promoters appear to have had increasing success using a potentially more powerful outlet.
Paid stock promotions, masquerading as investment opinion articles and blogs, have been popping up on the company news pages of Yahoo! Finance, the stock research website Seeking Alpha and, some observers suspect, on the website of Forbes magazine.
Articles published in paid stock promotions often forecast massive upside for the shares of companies whose financials indicate only marginal businesses.
For Yahoo! Finance, the promotions had become such a problem that it sent a letter to content providers in March stating that it no longer wanted them to send "investment opinion" pieces.
"In recent months, there has been a proliferation of investment opinion (INO) releases on the site's Stock Quote Pages via feeds from our press release providers," the letter reads. "These INO releases neither reflect the opinions of, nor are vetted for accuracy and reliability by the editorial team. Moreover, these releases do not constitute legitimate news about the companies on whose Quote Pages they appear. The Yahoo! Finance team has determined that these releases do not constitute suitable content for our users. Therefore, all press release providers must cease the syndication of INO releases to Yahoo! Finance effective immediately. Failure to comply with this change in policy will be considered a violation of our Editorial & Ticker Policies."
A Yahoo! Finance spokesman declined to comment further.
Press release distribution outlets whose releases appear on Yahoo! Finance include Business Wire, PRNewswire, PrimeZone Media Network and Market Wire, Sunnyvale, Calif.-based Yahoo! Inc. says on its user help pages.
In May, Seeking Alpha confessed to readers that five articles it published in March and April that recommended investment in Goff Corp. were paid-for advocacy pieces. Seeking Alpha already had a standing policy of not accepting or publishing paid-for pieces.
Goff, based in Medellín, Colombia, purports to be a gold mining company. Its shares traded as high as 65 cents in April, amid a broader stock promotion campaign that included the Seeking Alpha articles. As of June 11, Goff shares traded at 1 cent, over the counter under the ticker GOFFE.
Goff is also one of several penny stock companies and stock-promotion newsletters that were named as defendants in a lawsuit filed in May, alleging violations of California's law against spam e-mail.
Hotstocked.com, which tracks paid stock promotions, has reported that at least a dozen e-mail campaigns had been undertaken by promoters in May, who were paid $67,500 by an entity called Winning Media and other parties to recommend Goff shares. The information is based on the legal disclaimers on the promotional e-mails. At least one of the promotions stated that Goff stock was poised to "bounce 50-100% from current levels."
The promotion of Goff had been under way since March, according to PromoBuyer, another site that tracks promotions. It posted a screenshot of a mailer sent by stock promotion newsletter Penny Stock Pillager. Its publisher, Capital Financial Media, had received and managed a production budget of $2.2 million for its promotion of Goff, according to the legal disclaimer in the mailer.
Aside from the efforts of stock promoters, Goff appeared to be trying to raise its own profile. It put out at least 26 different press releases from March 15 to May 6, announcing new developments in its claimed gold mining project in Colombia.
At the same time, Goff has disclosed little about its mining projects in its filings with the Securities and Exchange Commission. As of the end of 2012, Goff was a development-stage company whose only asset was $5,653 in cash, according to its most recent quarterly filing with the SEC.
Efforts to reach Goff management for comment failed. The phone number listed on Goff's SEC filings no longer works and an e-mail sent to the company from its website bounced back as undeliverable.
Seeking Alpha said in its article acknowledging the paid-for articles that it wasn't aware of them until The Motley Fool market commentary website published a story about the Goff promotion on May 15.
Stock promotion is not illegal, in and of itself. Investor relations specialists often promote their clients' stocks to investors and the media. Promotion is said by many small-cap market observers to be a necessary task for microcap companies, as even those with legitimate business prospects often have trouble attracting attention from investors.
But promotions whose authors are not identified or who don't disclose their compensation, or that are not grounded in fact are often referred to as "pumps," and under SEC regulations, can be illegal. They are often designed to benefit seed shareholders who have purchased large holdings of cheap stock. The promotion can allow those seed shareholders to sell their shares to naive retail investors who rush to buy, based on the claims of the promotion. When the promotions end, the stocks often crash.
The SEC has attempted to crack down on pump-and-dump schemes over the past year by suspending trading in large numbers of dormant shell companies, which are often used as vehicles for pump-and-dumps. It suspended trading in 379 shell companies on a single day in May 2012. The commission suspended trading in another 61 shells on June 3, 2013.
On June 12, the SEC and the Financial Industry Regulatory Authority issued a statement warning investors about pump-and-dump schemes.
"Pump-and-dump promoters frequently claim to have 'inside' information about an impending development," the advisory warned. "Others may say they use an 'infallible' system that uses a combination of economic and stock market data to pick stocks. These scams are the inbox equivalent of a boiler room sales operation, hounding investors with potentially false information about a company."
"Spam e-mail is the bait used to lure people into making bad investment decisions. No one should ever make an investment based on the advice of an unsolicited e-mail," said Cameron Funkhouser, executive vice president of FINRA's office of fraud detection and market intelligence.
Seeking Alpha managing editor George Moriarty said in an interview that his organization is growing and is doing its best to deal with issues like stock promotions.
The New York-based online platform for contributor-based investment research has reacted to the Goff incident by changing its editorial processes. In the past, with few exceptions, Seeking Alpha wouldn't accept stories about companies with market capitalizations of less than $100 million or share prices of less than $1. That policy was relaxed, however, when the economy tanked, and companies including Freddie Mac and Sirius XM Radio Inc. fell below a dollar.
In order for a company to receive coverage now, however, it must carry a share price of at least $1 and a market cap of at least $100 million.
"While we recognize that a 'one-size-fits-all' rule will inevitably impact our legitimate authors, our concerns over illegitimate stock promotions are such that we have to err on the side of caution," Moriarty said in a written statement.
He later said in an interview that the new policy is not set in stone.
"If there is a sufficient level of expertise and high-quality analysis and depth to a story and the stock is the focus of the story, we are going to consider making an exception," Moriarty said.
Dave Gentry, chief executive of investor relations firm RedChip Cos., said that Seeking Alpha is often used as a vehicle by stock promoters.
"Seeking Alpha is easily the biggest abuser, as far as allowing bloggers to promote stocks," he said. "Some of these guys are I.R. guys, quasi-I.R. guys or friends of the CEO, but they are being paid under the table to promote stocks."
Gentry added that his Maitland, Fla.-based firm often writes blogs on behalf of clients, but that it always discloses its role in the writing. That is "something you aren't seeing from these promoters," he said.
Moriarty said Seeking Alpha will also crack down on the practice of mentioning microcap stocks in articles that are largely about a megastock in the same industry: Devoting a few paragraphs to a small energy company in article that is largely about Exxon Mobil Corp., for example. This tactic is commonly used by promoters trying to lend credibility to small-cap stocks with no identities of their own.
Some observers of the small-cap market have said they suspect that paid promotions have been planted in Forbes' blog network.
Blogger Tedra DeSue penned a story for Forbes in February about Swingplane Ventures Inc., a copper mining concern based in Santiago, Chile. DeSue's story touched on the fact that Swingplane's shares had been volatile but that company representatives disavowed any knowledge of a promotion.
The story also mentioned that penny stock newsletter Awesome Penny Stocks had recommended Swingplane shares.
The blog failed to mention that Awesome Penny Stocks is, itself, a stock promoter that accepts compensation to recommend the stocks it covers. At the time, Awesome Penny was promoting Swingplane.
"I think the demand for the metal will pick up as the global economy recovers," DeSue's article said. "As it does, the steps that Swingplane is taking with its mining efforts in Chile will make it well-positioned as a company and a stock."
The Fraud Research Institute, a Washington-based investment group that publishes research on alleged stock fraud, claims to have evidence that DeSue was paid to recommend Swingplane as part of its promotion.
A representative of the group provided The Daily Deal with screenshots from Elance Inc., a website where businesses post projects for writers and other freelance workers. One of the screenshots shows a project posted Feb. 23, seeking "a research article to get up on Forbes." The job description specifically stated that the winning bidder for the project had to be a Forbes contributor.
Another screenshot showed that the projected was granted to a freelance writer that bids on Elance projects under the user name Twilly D. Twilly D.'s profile page on Elance features a portfolio of articles written under the bylines of Tedra DeSue and Mia DeSue.
The Elance screenshots show that DeSue agreed to do the article for $250.
The representative of The Fraud Research Institute told The Daily Deal that it turned over all its research to Forbes regarding the Swingplane story and DeSue.
"We are investigating the concerns you raised," Forbes spokeswoman Mia Carbonell said in an e-mail to The Daily Deal. "If true, they would violate our policies, and Forbes will take appropriate action."
DeSue's Swingplane story has been taken down from Forbes' website.
Carbonell said DeSue's blogging account on Forbes was turned off in February and that her posts were taken down because "she strayed from the area she had agreed to cover into an area that Forbes considers speculative."
Carbonell said she that she couldn't confirm that DeSue had any conflict of interest. Carbonell said, however, that all Forbes contributors are required to disclose conflicts of interest, including financial interests in products, firms or commercial ventures related to their posts' subjects.
"Forbes does not allow contributors to accept payment in exchange for coverage on Forbes.com," she said.
DeSue did not respond to requests for comment for this story.
It should be noted that DeSue has written for other publications, including TheStreet.com. TheStreet and The Daily Deal are both published by TheStreet Inc.
William Inman, editor-in-chief at TheStreet, said his editors were not aware of the controversy over DeSue's Forbes story. He said that TheStreet has a very strict policy forbidding acceptance of payments or gifts from sources and doesn't even allow its reporters or contributors to trade stocks.
DeSue wrote 14 articles for TheStreet.com in April, but no longer writes for the website. All of her articles were on topics that editors assigned to her, Inman said. TheStreet stopped using DeSue as a contributor after she stopped responding to her editors' e-mails, he said. The decision to no longer use DeSue as a contributor was not related to the Forbes situation.
Swingplane's promoter Awesome Penny Stocks was the subject of an SEC investigation in 2012, according to people who were interviewed by investigators.
Neither Awesome Penny Stocks nor the SEC responded to a request for comment regarding the probe.
Awesome Penny was involved in the 2012 promotion of vitamin producer Sunpeaks Ventures Inc., which has since changed its name to Pharmagen Inc.
Jacob Wolinsky, who runs investment information website ValueWalk, said he was offered $1,000 to write an article praising Sunpeaks. Wolinsky said he was offered an additional $500 if he agreed not to disclose the payment, but refused the bonus. The article was published on Seeking Alpha in April 2012.
"I thought the guy who I talked to was just a shareholder who wanted some positive P.R.," Wolinsky said in an interview. "I had no idea that there was a promotion going on. It was the first and the last time I did a sponsored story."
Michael Goode, who has published almost 50 articles on Seeking Alpha, called Wolinsky's article "yet another paid stock promotion on Seeking Alpha," in a comment on the site. "SA has gone completely to the dogs over the last few years. It is a shame."
Goode, a frequent investor and short seller in microcap stocks, said part of the problem with Seeking Alpha is there are so many contributors doing so many stories. "They let a lot of stuff go, and there is only so much they can do," he said. "They are a lot better than they used to be."
Wolinsky said that since the Sunpeaks article, he has been approached numerous other times to write stories about microcap stocks and offered money for his services. "I really regret that I did the first story so I won't do it again, but there seem to be a lot of people out there who are willing to pay good money for sponsored stories," Wolinsky said.
He said that the people he corresponded with didn't use their real names and that, in at least one case, one used an e-mail service out of Canada that offers anonymity to its users.
"Ten or 15 years ago, bulk mailers were the way that stock promotions were done. About seven years ago it became mass e-mails," said Crocker Coulson, president of CCG Investor Relations. "Now the venue of choice is publications or sites like Seeking Alpha. The thing about it is that the people doing it are misrepresenting themselves and the investors looking at these stories may not be sophisticated enough to understand what is going on."
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|From: StockDung||6/18/2013 5:20:05 PM|
|Fox commentator paid $50,000 to tout stock |
June 18, 2013, 4:24 p.m. EDT
Fox commentator paid $50,000 to tout stock Commentary: Line blurs between ‘sponsored,’ independent analysis
By Chuck Jaffe, MarketWatch
Most investors can’t tell the difference between “sponsored investment research” and independent analysis, and that’s exactly what the “sponsors” — typically small companies paying for a marketing campaign that will inflate their stock activity and value — are counting on.
The difference gets even tougher to figure out when the sponsor hires someone who is known for giving independent commentary colored only by their own feelings and research.
A Tobin Smith email promoting Petrosonic
Think of it like a big honking commercial, with a celebrity endorser.
Last week, that bought-and-paid for stock endorsement was a 20-page mailer about Petrosonic Energy (OTN:PSON) , supported by an e-mail campaign, featuring Tobin Smith, a money manager who has been a fixture on the television news shows for 15 years, and who today is a regular on the Fox networks, describing himself on Twitter as a “guest anchor.” According to Fox, he is “a contributing market analyst for FOX News Channel and a regular panelist on ‘Bulls & Bears.’” (Fox, like MarketWatch, is owned by News Corp.)
While investors might have ordinarily treated the “special edition” of the new Next Big Thing Investor newsletter — Smith’s latest, just-started investment newsletter — like junk mail or spam, Smith’s name and his smiling, personable countenance had some investors doing a double-take, at least judging from the e-mails I received on the subject.
The people who contacted me considered buying the stock entirely based on Smith’s say-so, and the credibility he exudes in his Fox appearances. They didn’t appear to read the disclaimers of the campaign; had they bothered, they would have quickly found it was paid advertising for which Smith’s company pocketed $50,000.
This is a unique case because of how recognizable Smith is, and it brings into focus credibility questions that I’ve found most investors fail to answer even as they are deciding who they can trust. Fox’s official policy is that “no Contributor to FBN, nor his/her firm, and/or family members are allowed to accept financial consideration of any kind whatsoever to issue research, advertisements, or to otherwise promote individual stocks or securities,” a spokesman says. However, the network, which was unaware of Smith’s efforts on Petrosonic’s behalf until I contacted them, would not comment on the matter.
Asked whether he violated Fox’s rules, Smith said, via text message, “that policy was added late last year … my contract was not subject to that clause …”
Petrosonic could not be reached for comment.
The campaign started with Petrosonic — there’s a disclosure in the company’s annual report noting that it hired a firm “that provides strategic investor relations services” — but the issue here is not so much about what is being touted as by who is doing it, why they are doing it, and whether the audience can tell the difference between independent analysis and advertising cloaked in the guise of analysis.
Smith told me it’s actually better to have the company — rather than a third-party with a big wad of shares — backing these campaigns because it’s more “like public venture capital” than a play to pump the stock. Either way, the Petrosonic blitz last week helped the stock gain roughly 20%.
Tobin Smith on set at Fox Business News
And with Petrosonic up over 40% year-to-date and more than 135% in the last year, anyone who can’t see past the smiling face of the popular, charismatic Smith might think the stock really is “the investment opportunity of your lifetime,” as it’s described in the flyer.
For one, there’s the company’s lack of revenues, as in zero, according to filings, though Petrosonic did issue a press release late last week about how the company — which says it has a unique process for upgrading heavy oil — is now generating revenue from its plant in Albania.
Also overlooked in the hype are Petrosonic’s rising losses, negative cash-flow and the “going-concern letter” from auditors who think there is “substantial doubt” in Petrosonic’s ability to survive. In its regulatory filings — where all of those conditions are readily evident — Petrosonic notes that the business will fail if it can’t generate adequate cash/financing; those concerns aren’t mentioned in Smith’s “special report.”
Small-potatoes newsletter editors sell off their credibility all the time, as I have written before here and here.
Smith built his reputation around some timely investment picks, a best-selling book — “ChangeWave Investing” — and his personality and media presence. He was perhaps best known for being an early entrant into Canadian royalty trusts at a time when the U.S. market was in the tank; his stature grew as a result, as did his reputation.
How much that reputation was deserved on the basis of investment selections and analysis is an open question; Hulbert Financial Digest — which tracks newsletter performance — shows that from August 2002 through June of 2010, the ChangeWave Investing newsletter had an annualized total return of 0.6%, compared to a 4.6% return on the Wilshire 5000.
Smith sold ChangeWave Research in 2010 and agreed with the buyers to stay out of the newsletter game for at least two years, but that time has passed and he is launching his “Next Big Thing.” Meanwhile, his new NBT Group added “investor relations” to his resume. A positive spin — Smith’s, in fact — suggests that this kind of sponsored research makes the pitch to the public, so that they can provide venture capital for a business that can’t get that funding through traditional Wall Street channels; a less-charitable take (mine) is that he’s taking money to help small stocks find a market using fluff-and-shine hyperbolic chatter, where streams of press releases aimed at novice investors who fail to do due diligence.
“The problem with sponsored research is that no one reads it because no one knows who it is,” said Smith, who noted that entrepreneurs pursue direct-marketing campaigns hoping to keep more of their personal stake in the fledgling business while generating the capital needed to push it to success. “I am certainly the only 15-year cable news guy who is willing to sully himself talking about stocks in the under $500-million marketplace. … If I am guilty of being someone people know who goes into the sponsored-research business, I’m willing to take that shot, because I do believe there are very good companies and good management teams that are basically orphans in the investment community, and interest in those good companies is not going to happen out of the blue. Someone has to sell the message to get the stock trading, because without that trading the public capital markets are closed to a company.”
The problem is that Smith’s message doesn’t read like that of the Fox commentator or investment expert, but feels like a sales pitch.
He is aware of the drawbacks to Petrosonic, though he did not mention them in his newsletter. Smith — who said he does not hold any shares of PSON — told me that going-concern letters are a staple of small, negative-cash-flow micro-cap penny stocks and start-ups, and noted that some big brand-name companies overcame similar concerns in their early days. He noted that the revenue issues were addressed, as noted by the new press release.
But he also noted that the investor-relations job is to create some buzz over a stock, which isn’t going to happen with “too much focus on the risks.”
Alas, there was not even a momentary focus on the risks in the report. Moreover, according to the fine print, the report “does not purport to provide an analysis of any company’s financial position …”
That disclaimer notes that outside research and writers were used to put together the advertisement, but lays the responsibility for the content in one place, noting that “the opinions expressed … are solely those of Tobin Smith.”
The average investor won’t find those conflicts without looking for them. In fact, I have known Smith for years (and have appeared on several programs with him) and it’s mostly the missing negatives — hard to spot if you’re not looking for them — that I see as the difference between this sponsored pitch and something he might say that is completely independent.
That distinction — walking the fine line between what an analyst believes and what they are somehow compensated or incentivized to believe — is what this situation should showcase to investors.
Whether real, independent journalism and analysis is dying or simply being over-run in the everyone-can-be-in-the-media age we live in, investors must look for conflicts of interest, even from the names they trust. Plenty of news sites — MarketWatch included — run pieces from experts with skin in the game, and even though most sites are clear about when writers have a personal stake in the subject, such disclosures might be inadequate for the average reader.
What’s more, many investors probably don’t even read the disclosures.
That’s the moral of the story: Before taking a published tout from anyone, see if you can find any conflicts of interest or problems. Only when you are satisfied that the tip is legitimate and honest should you even consider proceeding with it.
Dan Wiener of The Independent Adviser for Vanguard Investors, speaking generally about sponsored research, noted that “Faking independence and acting as a paid shill for a penny stock is the lowest form of deceit.”
Brent Wilsey of Wilsey Asset Management in San Diego — who once appeared on-air with Smith years ago — said that money managers and media commentators “get paid many times over by having viewers/readers know [they] have no bias at all on what [they] are writing or speaking about. …I think an editor has no credibility at all when they are paid by the company.”
For his part, Smith says this move will not damage his credibility — especially because he believes the stock really will pay off.
In the end, if the first instinct is to ignore a tip or throw it out, trust that gut feeling; if there’s any inclination to pursue a recommendation, make sure you know where it is really coming from and the motivations for it before committing any money to it.
UPDATE: After this story first appeared, Smith posted on Twitter that he never mentioned the company on the air, and that his promotion of Petrosonic was ”100% fully disclosed on all materials and web site...fee is for sponsored research...fyi.”
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