| To: StockDung who wrote (1491) | 6/13/2013 12:17:48 PM | | From: Q. | | | | I received the POLR paid mailer yesterday, after the SEC trading halt was already in effect.
That's pretty funny. |
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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
Chuck Jaffe
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.
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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%.
Getty Images
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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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| From: StockDung | 6/28/2013 9:25:58 PM | | | | | | Meet Tobin Smith: The Dubious Stock Pitchman Fired From Fox News
Blog ››› June 19, 2013 12:33 PM EDT ››› ERIC HANANOKI
Fox News has fired paid contributor and market analyst Tobin Smith for receiving compensation to promote the stock of Petrosonic Energy, a violation of network policy. According to a Media Matters review, Smith's company, NBT Equities Research, also received compensation for promoting numerous other companies through his website and conservative newsletters, and used his Fox News credentials to hawk volatile stocks to conservatives.
MarketWatch's Chuck Jaffe reported that Smith issued "sponsored investment research" to tout Petrosonic's stock in a 20-page mailer, for which NBT received $50,000. The paid endorsement is against Fox's policy that "no contributor to FBN [Fox Business Network], 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." In a post today on his website, Smith acknowledged that he is "no longer a Fox contributor" but defended his "business of sponsored research for uncovered emerging growth companies." He also wrote: "For the record, my last contributor agreement with Fox News did NOT include any exclusion from me or my company sponsored research. But that is water under the bridge."
MarketWatch -- which, like Fox News, is owned by News Corp. -- noted that companies hire people like Smith for sponsored research "to help small stocks find a market using fluff-and-shine hyperbolic chatter" at novice investors.
Smith's company produces voluminous quantities of sponsored content. In June alone, NBT's website has featured posts by Smith with compensation disclaimers for GlyEco (" 200,000 options of GlyEco"), Petrosonic (" $50,000"), Brazil Minerals ( $40,000), Barfresh Food Group ( "$35,000 and 75,000 restricted shares"), and Pulse Beverage ( "$50,000").
Smith also regularly pitches paid stock promotions to conservatives through right-wing email newsletters. Media Matters identified at least six recent instances in which Smith's NBT Group was compensated to promote a company's stock via Townhall.com newsletters. The companies include Medient Studios in 2013 ( "225,000 shares"); BOLDFACE Group in 2013 ( $50,000); IceWeb in 2012 ( $50,000 via a third-party firm); Plandai Biotechnology in 2012 ( "$30,000 monthly and 1.4 million shares for a one year"); Replicel Life Sciences in 2012 ( "a fee of over $1000.00 in cash"); and Petrosonic in 2012 and 2013 ($50,000).
 Since mid-December 2012, Smith has sent compensated Petrosonic advertisements to subscribers of email lists for Townhall.com, National Review, Dick Morris Reports, and CainTV, which is run by Fox News contributor Herman Cain.
MarketWatch wrote that Smith's Petrosonic advertising pitches ignored several problems with the company's finances, including its lack of revenues, "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."
Other stocks that Smith promoted to conservative newsletter subscribers paint a similarly rosy picture of volatile companies with low share prices. At least two stocks are now virtually worthless: BOLDFACE Group closed yesterday at $.06 and IceWeb closed at $.02. Two other companies, Plandai Biotechnology and Replicel, are both trading at between approximately $.50 and $.65. And Medient Studios is trading at near $1 a share.
Smith's compensated emails advertised lofty stock returns. For instance:
- Smith recommended in January 2013 to buy BOLDFACE "now while you can still get them at less than 50-cents, and you could ... Turn $10,000 into $50,000 in the next 6-12 months!"
- Smith wrote of IceWeb in May 2012: "I cannot say it LOUD enough or STRONG ENOUGH: you SHOULD be buying shares of IceWeb (IWEB) NOW Under The .25-.30 per share valuation! ... I've been a tech nerd and research analyst for 20 years...and only a very FEW times have I found a company in the EXACT right place at the EXACT right time and the EXACT right value for me to make a 10X profit IN MY SLEEP over the next 9-12 months."
- Smith wrote of Plandai in May 2012: "PLPL trades today around .30. My projected growth for PLPL shareholders is around $3 over next 12 monthsfollowed [sic] by stunning capital gains potential for long term buy-and-hold investors."
- Smith wrote of Replicel in April 2012: "NBT Equities Research LLC, my equities research firm, holds a $10 price target for Replicel's stock post Phase II results...about 500% HIGHER from its stock price today."
(For more Smith pitches, go here.)
Smith Used Fox News' Brand For Stock Promotions A look at Smith's website and newsletter emails shows that he cashed in on his Fox News credentials to hawk volatile stocks. When "massive profit seeking investors" visit NBT's site (accessed this morning), they're greeted by a note that Smith is a "Fox News & Fox Business Contributor."
Smith's bio touts his Fox News connections: "For the last twelve years, Mr. Smith has been an exclusive contributor and market analyst for Fox News and more recently Fox Business Network. He is the co-star of FNC's 'Bulls and Bears,' the #1 rated business program."
NBT's advertising media kit states: "Our founder, Tobin Smith, is a regular contributor at Fox Business Network and regular guest on Fox News Bulls & Bears. This adds to the NBT Equities Research brand's reach and brand equity."
Smith also used his cable news credentials in emails. In one instance, Smith claimed he was giving readers information that he was prohibited from sharing with Fox News viewers: "Obviously, the time to acquire shares in Replicel is BEFORE the next Phase I/IIa human trial results hit the tape--which is why I am writing you today! This is JUST the kind of next big thing investment I'd LIKE to be able to talk about on Fox News...but I can't. Replicel is too small (well at least for now) to share their exciting story with the 2 million investors who watch me every week on Fox's Bulls & Bears (Fox's rules, not mine.)."
When promoting Plandai, Smith wrote: "In a nutshell, here is why we so STRONGLY suggest the ground floor opportunity of buying and HOLDING Plandai (PLPL) shares below 50 cents. If you know me from my decades on cable news, you know ONE thing about me--I am a STRAIGHT shooter who calls 'em like I see 'em and NOT afraid to take a strong position when I KNOW Im [sic] right."
5 Stocks That Smith Promoted Through Conservative Newsletters The following is a list of five stocks -- in addition to Petrosonic -- that Smith promoted through conservative newsletters in either 2012 or 2013 for which Smith's company received compensation.
Medient Studios (MDNT)
Disclosed Compensation: NBT was "compensated 225,000 shares for sponsored research and investor awareness services on behalf of Medient Studios, Inc ('MDNT') from a third party shareholder." [ Townhall Spotlight email, 5/9/13, to Media Matters account]
Tobin Smith Claims About MDNT:
- "How This Movie Magician Turns Movie Bombs into Movie Gold for Early Investors in Medient Studios."
- When visionary founder/CEO of Medient Studio, Inc. (MDNT) Manu Kumaran showed me how he can turn a Box Office bomb into cash money gold ... I was sold."
- "Get our report today and see for yourself ... I'm investing in the Medient Advantage and I think with your aggressive growth money you should too ... NOW ... before the news gets to Wall Street."
Stock Price On 6/18 Closing: $1.05.
See Smith's email sent through Townhall.com's Spotlight here (image is composed screenshots of an email sent to Media Matters).
BOLDFACE Group (BLBK)
Disclosed Compensation: "NBT is paid fifty thousand dollars as an editorial fee from Beaumont Media LLC." [ Townhall Spotlight email, 1/29/13, to Media Matters account]
Tobin Smith Claims About BLBK:
- "Put your aggressive growth money on the Kardasian sisters and their ONE HUNDRED million member social media list...buy BOLDFACE Group, Inc. shares (BLBK) today BEFORE they unleash their secret social marketing weapon to sell hundreds of millions of their Khroma brand cosmetics to their millions and millions fans worldwide."
- "Boldface Group (BLBK) is about to leverage the "viral power" of 100 million "socially-connected" Kardashian fans to make Khroma Beauty™ the NEXT red-hot, got-to-have-it celebrity product sensation!"
- "Buy shares of Boldface Group (BLBK), now while you can still get them at less than 50-cents, and you could ... Turn $10,000 into $50,000 in the next 6-12 months!"
- "Celebrities use social media to make millions. Now, thanks to the Boldface Group (BLBK) you can too!"
- "And buying shares of Boldface Group (BLBK) now, while you can still get them at less than 50-cents is the chance of a lifetime to cash in on the NEXT celebrity money machine! Owning shares of Boldface Group stock, (BLBK) opens the door for you to participate in the kind of celebrity profits that are usually available only to groupies, agents and rich friends."
Stock Price On 6/18 Closing: $.06.
See Smith's email sent through Townhall.com's Spotlight here and here.
IceWeb (IWEB)
Disclosed Compensation: $50,000 from "a 3rd party." [ Townhall Spotlight email, 5/24/12, to Media Matters account]
Tobin Smith Claims About IWEB:
- "In short: I cannot say it LOUD enough or STRONG ENOUGH: you SHOULD be buying shares of IceWeb (IWEB) NOW Under The .25-.30 per share valuation!"
- "NOW that you understand just a little about what's happening in the world of Cloud Storage and Big Data Analytics...and the impact on data storage from the petabytes of data they create...you understand ALL you need to know to make a damn FORTUNE from this under 25 cents stock/ tiny $20 million market cap company." [emphasis in original]
- "As a micro cap publicly traded company they have ZERO coverage by IT analysts on Wall Street--that is the story for most EVERY IT stock under $500 million market cap. But it's exactly this LACK of visibility that allow you and I to purchase shares NOW at a ground floor valuation JUST as their fundamentals are about to EXPLODE."
- "Look...I've been a tech nerd and research analyst for 20 years...and only a very FEW times have I found a company in the EXACT right place at the EXACT right time and the EXACT right value for me to make a 10X profit IN MY SLEEP over the next 9-12 months...MORE if they hold out for the next 18-24 months and wait for the REALLY ENORMOUS payday."
Stock Price On 6/18 Closing: $.02
See Smith's email sent through Townhall.com's Spotlight here.
Plandai Biotechnology (PLPL)
Disclosed Compensation: "$30,000 monthly and 1.4 million shares for a one year issuer sponsored research and investor program." [ Townhall Spotlight email, 5/23/12, to Media Matters account]
Tobin Smith Claims About PLPL:
- "We initiated coverage on Plandai Biotechnology (PLPL) with a Strong Buy and $22.50 Long Term Target implying 2300%+ UPSIDE from its current market price."
- "PLPL trades today around .30. My projected growth for PLPL shareholders is around $3 over next 12 monthsfollowed [sic] by stunning capital gains potential for long term buy-and-hold investors."
- "In a nutshell, here is why we so STRONGLY suggest the ground floor opportunity of buying and HOLDING Plandai (PLPL) shares below 50 cents. If you know me from my decades on cable news, you know ONE thing about me--I am a STRAIGHT shooter who calls 'em like I see 'em and NOT afraid to take a strong position when I KNOW Im right."
- "My equity research firm NBT Equities Research LLC STRONGLY believes Plandai Biotechnology will become the $Billion Next Big Thing in the nutritional foods industry."
- "Its our strongest Strong Buy recommendationwith a short term $2.50 targetand long term $22.50 target or 23X UPSIDE from under .50 price. 2300% UPSIDE from the next $billion nutritional food company."
- "Final question: What are you waiting for? BUY some shares NOW at the ground floor and DO NOT MISS this monster life changing investment opportunity." [emphasis in original]
- "P.S. Im forecasting a potential 10-bagger in PLPL shares over the next 12 months, but the longer term performance looks more like a 2300% move or better."
Stock Price On 6/18 Closing: $.51
See Smith's email sent through Townhall.com's Spotlight here.
Replicel Life Sciences, Inc. (REPCF)
Disclosed Compensation: NBT received "a fee of over $1000.00 in cash from Replicel Life Sciences, Inc. as compensation for the distribution of his advertisement." [ Townhall Spotlight email, 4/12/12, to Media Matters account]
Tobin Smith Claims About Replicel Life Sciences, Inc.:
- "Just 6 Days Until This Public Company Reveals $BILLION Cure for Baldness."
- "Replicel Life Sciences, Inc. (REPCF) is now within just 6 trading days of receiving the first human Phase I/IIa trial results data on the world's first real cure for hair loss in men and women. NBT Equities Research LLC, my equities research firm, holds a $10 price target for Replicel's stock post Phase II results...about 500% HIGHER from its stock price today. Replicel has ALREADY recorded 50%+ hair growth in their pre-clinical trials--this is why we are so excited to see the NEXT set of clinical trial results."
- "Bottom-line: Time is VERY short and PROFITS look very big. I cannot think of a mass market multi-billion-dollar retail/lifestyle healthcare category with such a relatively low-cost/high-reward profile. All of which in my opinion makes NOW the time to build positions BEFORE human trial results are released in the next 6 trading days." [emphasis in original]
- "50%+ hair growth in 100% of their initial pre-clinical trials - 500% upside for the stock--this is why we are so excited to see the NEXT set of clinical trial results! You now have LESS than 6 trading days to acquire shares BEFORE the Phase I/IIa human trial results hit the tape - here's our full report of this exciting opportunity!"
Stock Price On 6/18 Closing: $.64
See Smith's email sent through Townhall.com's Spotlight here.
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| From: StockDung | 6/29/2013 12:06:03 AM | | | | | | Fox's Charles Payne Responds To Paid Stock Pushing Inquiry By Ducking Questions, Scrubbing Webpage
Blog ››› June 24, 2013 4:34 PM EDT ››› ERIC HANANOKI
Fox's Charles Payne responded to a Media Matters inquiry about his recent paid promotions for company stocks by declining comment on all but one question. Payne, or his firm, also appears to have scrubbed a webpage on his company's website connecting him to one of the company stocks in question.
Media Matters reported earlier today that Payne, a contributor and frequent guest host for Fox News and Fox Business, was compensated to promote the now worthless stocks of three companies (Brainy Brands, NXT Nutritionals, and Generex) since joining Fox. The practice of compensated stock endorsements is currently prohibited by Fox rules, and resulted in the recent contract termination of contributor Tobin Smith.
Payne responded to a Media Matters inquiry by declining to comment except for one question. Media Matters had asked Payne:
1) How many times has Payne, or his firm, received compensation to promote the stock of a company since October 2007?
2) How much did Payne, or his firm, receive to promote Brainy Brands Company, NXT, and Generex?
3) All three companies' stock prices appear to be virtually worthless now. Do you have any comment on how these stocks have fared given Payne's forecast?
4) Can you confirm that Payne was involved in setting up the websites Afterthecrashwinners.com, Investafterthecrash.com, and Postcrashgains.com?
5) MarketWatch reported that Fox rules state "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." Did Payne's compensation to promote the stocks of Brainy Brands, NXT, and Generex violate this policy?
6) In 1999, Payne reached a settlement with the SEC to settle a claim without confirming or denying wrongdoings. Is Fox aware of the SEC settlement?
Payne responded this afternoon: "Never heard of any of the websites your [sic] mentioned and only affiliated with www.wstreet.com. There are no other comments to you or your organization."
A webpage on Payne's Wall Street Strategies site -- housed at www.wstreet.com/brainybrands/default.asp -- previously advertised an offer for "Charles Payne's FREE 10-day Bonus Report--Spotlight on a Winner: How Brainy Brands Is Poised to Take Over the Multibillion-Dollar Early Education Industry (a $19 value)." Media Matters linked to the webpage in its original report, and the URL was functioning prior to posting. Now, however, the URL redirects to www.wstreet.com/signup/newsletter.asp, which doesn't contain any mention of Brainy Brands. The original page is still accessible via Google Cache and is screenshotted here (see a Google search for the site here). The page carried a 2011 copyright date.
Media Matters wrote in its original article of the three websites referenced in the inquiry and by Payne:
In addition to his sponsored research report, a Payne-authored pitch for NXT appeared on at least three separate websites: Afterthecrashwinners.com, Investafterthecrash.com, and Postcrashgains.com. The websites are now offline, but the Internet Archive cached the sites starting in 2009. The websites carried a 2013 copyright.
Media Matters had asked for clarification about the websites because they were attributed to Payne on the original sites, and were linked to Payne on several penny stock-related websites. For example:
Regardless of whether he is aware of those websites, Payne was still paid to promote NXT's stock. A July 24, 2009, press release by NXT stated: "Charles Payne has been paid $25,000 by a third party for this Research Report on NXT Nutritionals Holdings, Inc."
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| From: StockDung | 6/29/2013 12:15:36 AM | | | | | | Fox Analyst Charles Payne Was Paid To Push Now Worthless Stocks Last Week Fox Fired A Contributor For Similar Actions Blog ››› June 24, 2013 11:35 AM EDT ››› ERIC HANANOKI
UPDATE: Fox's Charles Payne Responds To Paid Stock Pushing Inquiry By Ducking Questions, Scrubbing Webpage
Charles Payne, a contributor and frequent guest host for Fox News and Fox Business, was compensated to promote the stocks of at least three companies since joining Fox. The practice of compensated stock endorsements is currently prohibited by Fox rules, and resulted in the recent contract termination of contributor Tobin Smith.
According to a Media Matters review, Payne was paid $40,000 to promote The Brainy Brands Company, "$25,000 by a third party" to promote NXT Nutritionals Holdings, and an undisclosed amount for a "consulting arrangement" to promote Generex Biotechnology Corporate.
The share prices of the companies Payne was paid to tout are now essentially worthless.
Payne forecasted lofty gains for investors who bought those stocks. He projected in 2011 that Brainy Brands could hit $4.50 a share in three years. At the time of the pitch, Brainy Brands was trading at around $1.35 -- it's now below 1 cent. Payne claimed in 2009 that NXT could "turn $10,000 into $25,000." At the time, NXT was trading for $2.00 -- it's now below 1/10th of a cent. And Payne claimed in November 2007 that Generex, then at $1.58, was a long term "screaming buy" which could hit $7.00. It's now trading at roughly 4 cents.
Aside from rosy projections, Payne's sponsored stock pitches shared a common theme: using his cable news and Fox credentials to assure skeptical investors that his advice was trustworthy. A direct marketing company which worked with Payne stated it brandished Payne's Fox News connections "to build credibility" with his potential customers. The stock pitches were also used as a vehicle to entice readers to join Payne's subscription newsletter.
 Fox policy prohibits contributors from receiving compensation to promote a stock. MarketWatch -- which, like Fox, is owned by News Corp. -- reported on June 18 that a spokesman said "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." As a result of the rule, Fox News fired contributor Tobin Smith, who regularly releases sponsored research reports (Smith claimed his contract "did NOT include any exclusion from me or my company sponsored research").
While Fox currently prohibits financial arrangements like Payne's, it's not clear whether his actions specifically violated Fox rules. MarketWatch quoted Smith claiming that the rule was instituted in "late" 2012, or after the three Payne stock promotions studied in this report first occurred. It's also not clear if Payne has been compensated for stock promotions after 2011. Regardless, even if Payne's actions occurred before an official Fox policy, he still used Fox's brand to engage in practices that the network now thinks is problematic enough to prohibit and fire an employee.
Fox and Payne did not respond to requests for comment.
Payne and his company, Wall Street Strategies, have a problematic history related to the disclosure of paid stock endorsements. In 1999, the Securities and Exchange Commission (SEC) announced that while not "admitting or denying" wrongdoings, Payne "agreed to pay a civil penalty of $25,000." The SEC alleged of Payne:
The Complaint alleges that on at least eight occasions, Wall Street Strategies recommended that its clients purchase Members stock through recorded messages on its telephonic stock recommendation service. The Complaint also alleges that Payne failed to disclose that he received payments from Members to promote Members stock.
More about Payne's alleged actions are contained in this May 1997 SEC release.
In this report:
Who Is Charles Payne?  Charles Payne is frequently seen on Fox News and Fox Business as a contributor and guest host. He has a regular segment called "Making Money with Charles Payne" which airs throughout the day on Fox Business. His Fox biography states he joined Fox "in October 2007." He founded Wall Street Strategies, "an independent stock market research firm where he serves as chief executive officer and principal analyst," in 1991.
Payne's Fox News and Fox Business appearances are routinely filled with misinformation on topics like the unemployment rate, unemployment insurance, climate change, corporate tax breaks, disability benefits, and federal worker compensation. He has attacked antipoverty programs by claiming "it gets a little comfortable to be in poverty"; said that "the good part about the stigma [of food stamps] is it actually does serve as an impetus to get people off" them; claimed poor people are "indebted servants" who believe society "owes" them; and said wealth disparity "really doesn't" bother me -- "in fact, it inspires me." He's also spoken at Tea Party rallies in recent years.
Payne's Wall Street Strategies offers "a complete suite of superior stock selection services that meet the needs of professional traders, active investors and long-term investors with horizons of one day to six months or more." The company's advertised services (account required) include a monthly newsletter ($159/year), "Hotline" Reports ($4,000/year) and "Swing Strategies" Reports ($4,800/year).
Payne And The Brainy Brands Company 
[chart via Google Finance, accessed 6/21]
The Brainy Brands Company (ticker symbol: TBBC) is an education company which produces early education material such as DVDs, books, and games. Charles Payne pushed lofty investment goals for Brainy Brands, claiming it could turn "$10,000 into $33,300" and become "a market leader in the multibillion-dollar early education industry." Payne was paid $40,000 by a marketing group tied to Brainy Brands for the promotions.
Today, the company is virtually non-existent. Its website returns a hosting domain message stating, "This Site Is Under Construction and Coming Soon." Its stock is worthless, recently trading for $0.0028 a share with a market cap ( total value of issued shares) of less than $130,000.
To promote Brainy Brands, Payne setup a website -- now offline -- called PaynesEarlyEducationStock.com. The website carried a copyright date of 2011, and is accessible via the Internet Archive, which cached the site between July and December 2011.
A message signed by Payne on PaynesEarlyEducationStock.com stated that Brainy Brands could "help you profit 233%, turning $10,000 into $33,300"; "this million dollar company will shatter its sales numbers by 5,800%!"; and the company "stands to become a market leader in the multibillion-dollar early education industry." A chart listed the stock's "recent price" as $1.35 and projected its share price to rise to $4.50 in three years.
Payne's company website, wstreet.com, still contains material touting Brainy Brands. A signup page for Charles Payne's Insights & Trends newsletter tells news subscribers they'll receive a "FREE 10-day Bonus Report--Spotlight on a Winner: How Brainy Brands Is Poised to Take Over the Multibillion-Dollar Early Education Industry (a $19 value)."
Both PaynesEarlyEducationStock.com and wstreet.com contain links to a disclaimer -- now offline -- which stated that Payne was paid $40,000 for the "paid promotional advertisement of The Brainy Brands Company":
Disclaimer: This online report is for general information purposes only. Do not base any investment decision on information in it. Any price targets are academic theory and should not be relied upon. Charles Payne's Common Sense Newsletter is an independent circulation newsletter. This online report is a solicitation for subscriptions and a paid promotional advertisement of The Brainy Brands Company Inc. (hereafter the "featured Company"). Charles Payne's Common Sense Newsletter received forty thousand dollars, as an editorial fee, from Creative Direct Marketing Group, Inc., which it received from the featured Company. This company was chosen to be profiled after Charles Payne's Common Sense Newsletter completed due diligence on the company. Charles Payne's Common Sense Newsletter expects to generate revenue and new newsletter subscribers and valuable exposure, the amount of which is unknown at this time, resulting from the distribution of this report. Creative Direct Marketing Group, Inc. received fifteen thousand, eight hundred dollars from the Company, for the costs of creating and distributing this report in an effort to build investor awareness.
Among Payne's claims on PaynesEarlyEducationStock.com about Brainy Brands:
- "My research shows its impressive 5-part plan could send its sales soaring to $59 million over the next 2 to 3 years. This 5,800% increase could help you profit 233%, turning $10,000 into $33,300."
- "Brainy Brands could be the key to tripling your money...but only if you get in soon!"
- "For the reasons illustrated in the details of the 5-part plan, I believe that investors who beat Wall Street to the punch by getting in now could very well see gains of 233% over the next 36 months. There's no question that 233% returns are aggressive. And as any good investor knows, risk and reward go hand in hand. So while I urge you to take advantage of what I believe is an incredible buying opportunity, I also urge you to do so cautiously by limiting the amount of money you invest."
- "In the pages of my newsletter, Common Sense, I regularly feature bargain stocks such as Brainy Brands (TBBC)--stocks that can double or triple your money in 2 to 3 years."
- "In as little as 36 months, The Brainy Brands Company (OTCBB: TBBC) stands to become a market leader in the multibillion-dollar early education industry. Investors who get in now could enjoy returns of 233% once the company begins profiting from its aggressive 5-part marketing plan."
Payne's paid promotion of Brainy Brands was picked up by several "penny stock newsletters" archived on the penny stock site hotStocked.com. The penny stock newsletters trumpeted Payne's connection to Fox Business in its promotions:
- In September 2011, a message appeared in numerous penny stock newsletters -- carrying names like WallStreetPennyStock Advisors, Stock Castle, Obscure Stocks, and ShamrockStocks.com -- promoting Brainy Brands because it was endorsed by a Fox personality. The message stated: "Charles Payne, a contributor to FOX Business Network believes that the failure of American education has created an opportunity for investors to see TBBC at $4.50 over the next 36 months!!" The newsletters contained a picture of Payne next to Fox News' logo.
 - A September 2011 message in "DAMN GOOD PENNY PICKS" stated: "TBBC has garnered endorsements from Charles Payne, a contributor to Fox Business Network, and from Bob Flaherty, a former senior editor at Forbes. Not bad at all."
- In July 2011, a message appeared in a penny stock newsletter promoting Brainy Brands and recommending readers "download financial guru Charles Payne's Insights and Trends" newsletter about Brainy Brands.
Payne And NXT Nutritionals Holdings 
[chart via Yahoo! Finance, accessed 6/21]
NXT Nutritionals Holdings (ticker symbol: NXTH) was billed by Charles Payne in 2009 as a company producing a sweetener that could soon rival Splenda and whose stock could be a "400% winner" for investors.
Today, the company's website "is currently unavailable." Its stock is worthless, trading at around $.0006 -- 6/100s of a penny.
NXT issued a July 24, 2009, press release announcing Payne wrote a research report supporting their efforts. The headline of the release was: "Wall Street Veteran and FOX News Business Contributor, Charles Payne, Discusses NXT Nutritionals` SUSTA Product and Future Growth Opportunities."
The release touted Payne's Fox News credentials and quoted the CEO of the company saying, "As a veteran stock analyst and leading contributor to several business shows, we are pleased to relay Charles Payne's report to investors. Not only does the report examine the potential of NXT Nutritionals, it also provides timely analysis of the food and alternative sugar markets as well."
The last paragraph of the release stated: "Charles Payne has been paid $25,000 by a third party for this Research Report on NXT Nutritionals Holdings, Inc."
In addition to his sponsored research report, a Payne-authored pitch for NXT appeared on at least three separate websites: Afterthecrashwinners.com, Investafterthecrash.com, and Postcrashgains.com. The websites are now offline, but the Internet Archive cached the sites starting in 2009. The websites carried a 2013 copyright.
In the pitch, Payne claimed that the company stock "could hand you 150% gains in 18 to 24 months," "could be my next 400% winner" and "turn $10,000 into $25,000."
Among Payne's claims about NXT on the websites:
- "Invest in the next-generation sweetener that has the makers of Splenda® running scared."
- "Read on for 7 irresistible forces that have already doubled this stock and that could hand you 150% gains in 18 to 24 months!"
- "Get in now to turn $10,000 into $25,000."
- "For more on why I'm so confident that NXT Nutritionals Holdings, Inc. (NXTH.OB) could be my next 400% winner, claim your FREE copy of my new Special Report, How NXT Nutritionals Is Poised to Take Over the Multibillion-Dollar Sweetener Industry (a $39 value). It's yours FREE when you subscribe to Common Sense within the next 10 days."
- "I believe NXT Nutritionals (NXTH.OB) could be one of the fastest-rising stocks in 2009 and 2010. This is the kind of stock that once it gets moving could rally fast, so there's a sense of urgency to beat the crowds. Especially since I think this stock will skyrocket in the next few months."
A chart on the website claims that Payne originally recommended the stock at $1.00 on July 16, 2009, the "current stock price" is $2.00, and the "high projection" price is $5.00. The chart includes a note stating: "This is an aggressive recommendation with strong potential for rich returns. To minimize your risk, I recommend limiting your investment to no more than 5% of your portfolio."
In contrast to the press release disclaimer about Payne receiving "$25,000 by a third party," a disclaimer on Postcrashgains.com claimed that Payne "did not receive any direct compensation with respect to the writing of this online report" but hoped to receive "new subscriber revenue" for his newsletter:
Charles Payne's Common Sense Newsletter did not receive any direct compensation with respect to the writing of this online report. This stock was chosen to be profiled after Charles Payne's Common Sense Newsletter completed due diligence on the stock. Charles Payne's Common Sense Newsletter expects to generate new subscriber revenue, the amount of which is unknown at this time, to its newsletter through the distribution of this online report.
A user of the SiliconInvestor.com message board posted screenshots of a paper mailer he received of Payne's NXT pitch, which echoes the language used on Payne's pro-NXT sites. The poster said he received it on October 13, 2009.
Payne's endorsement is touted in an apparent ad for NXT posted online by an account called "nxthpr": "read what Wall Street researcher Charles Payne has discovered about NXT Nutritionals!"
Payne And Generex Biotechnology Corporate 
[chart via Yahoo! Finance, accessed 6/21]
In November 2007, Charles Payne recommended Generex (ticker symbol: GNBT), a company involved in drug delivery systems and technology, as a long term "screaming buy" at $1.58 a share. When Payne made his recommendation, he was a consultant to the company for an undisclosed amount.
Today, Generex is trading at roughly $.04 a share with a market cap of roughly $18 million. Unlike the other stocks in this report, it at least has a fully functioning corporate website.
On November 15, 2007, Payne issued a report through Wall Street Strategies recommending Generex as a "long idea" for investors at $1.58. Payne claimed that the company recently received approval for a drug delivery system and "since then, the stock has drifted lower and in our estimation makes it a screaming buy." Payne added: "Currently, Oral-lyn is in phase III testing in North America. We expect that approval would automatically make this a $5.00 stock, but once sales begin we think the stock could move even higher (our 17 page institutional report has a share price target of $7.00."
In his report, Payne acknowledged that he was being compensated by the company, but didn't specify how much he was receiving: "We must note that after the last time we recommended the stock we heard from the company and have since entered into a consulting arrangement."
Generex released a November 15, 2007, press release highlighting Payne's report. The release stated that Payne "is a frequent guest on several well-respected finance-oriented radio and television programs." The release also acknowledged that "Generex has entered into a consulting agreement with Wall Street Strategies to provide this report and ongoing investor relations services" but did not note the amount.
Generex's Form S-3 filed with the SEC on April 30, 2008, lists Wall Street Strategies as a "selling shareholder," having sold 140,000 shares.
How Payne Used Fox News To Promote His Paid Stock Pitches A common theme among Payne's paid stock promotions is how his cable news and Fox credentials were used in an attempt to gain the trust of skeptical investors. A direct marketing company that says it did work for Payne wrote that it used Payne's Fox News connections "to build credibility" with potential Payne customers.
Creative Direct Marketing Group president Craig Huey wrote in a February 23, 2011, post that it made an advertising campaign for Payne partly based around his "great exposure as a regular commentator on the FOX Business Network and FOX News." The campaign aimed to "play up and expand on Charles Payne's credibility by positioning him as a trusted stock commentator who has dispensed profitable advice to millions on television, radio and through his Common Sense newsletter" and "created an envelope with a photo of Charles on TV to build credibility." A disclosure statement on PaynesEarlyEducationStock.com stated that Payne "received forty thousand dollars, as an editorial fee, from Creative Direct Marketing Group, Inc., which it received from" Brainy Brands. A screenshot on the firm's site also suggested the company helped with Payne's NXT work.
Payne's Fox credentials factored heavily in his paid pitch for NXT. The first line of Payne's pro-NXT website states: "Dear Cautious Investor, You may have seen me on FOX TV or heard me on the radio, commenting on the economy and giving my investment recommendations."
The top right hand corner of website promoting NXT has a picture of "TV personality" Payne on what appears to be Fox Business. Below the image reads: "Charles is a contributor to the FOX Business Network."
Payne also stated on the website: "My name is Charles Payne. I'm the CEO of Wall Street Strategies, Inc., an independent stock research company and editor of the investment newsletter Common Sense. I also appear frequently on the FOX Business Network and host my own radio show."
He later suggested that readers are getting advice that's too hot for TV, writing: "But when I'm on TV or radio, I have very little time to get into details of just a single stock idea, especially one that is meant to be a longer-term investment. ... because of limited air time, I can't tell viewers everything they need to know about hidden gems like this. ... Now you have a taste of the type of stocks I typically recommend...the ones I generally don't have time to mention on my radio show or when I'm appearing in a segment for the FOX Business Network."
Payne's cable news credentials were also used to sell Brainy Brands. As noted above, numerous penny stock newsletters touting the stock noted that it was recommended by a Fox analyst. Payne also referenced his "TV appearances" in explaining why he was enthusiastic about the stock: "Many investors believe that stocks like Brainy Brands are hard to come by, or reserved for a different class of investor. But that's not the case at all--I find great bargain stocks all the time. And while I cover some of these gems during my limited TV appearances, I simply can't talk about all of them."
Generex did not directly reference Fox in its November 2007 press release touting Payne's research report, but did note that he "is a frequent guest on several well-respected finance-oriented radio and television programs" and "is routinely sought after for his market opinions by several prestigious news organizations." Payne's Generex research report was issued through Wall Street Strategies, and the firm prominently plays up his Fox ties.
The front of Wall Street Strategies' website (accessed 6/21/13) features a Fox News banner logo and video of Payne on Fox:
The company's about page states that "Charles is featured throughout the day on the Fox Business Network" and "is a member and occasional host of 'Varney & Co'. In addition, he guest-host several shows including 'Cavuto on Business' and 'Your World'." Its media page features a sidebar of clips of Payne on Fox. A banner advertisement for Payne's Hotline newsletter contains a quote from Fox News host and senior vice president Neil Cavuto:
A customer testimonials page includes a quote from a customer saying, "my wife and I religiously follow you on the FBN and thoroughly enjoyed your recent book. Betwixt your online market commentary, FBN appearances and reading your book a couple (to 6 times...) these two Bostonians are finally gaining more confidence in our investments and long-term wealth creation strategies."
Wall Street Strategies is regularly mentioned when Payne appears on Fox News and Fox Business.
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| From: StockDung | 6/29/2013 12:15:37 AM | | | | | | Fox Analyst Charles Payne Was Paid To Push Now Worthless Stocks Last Week Fox Fired A Contributor For Similar Actions
Blog ››› June 24, 2013 11:35 AM EDT ››› ERIC HANANOKI
UPDATE: Fox's Charles Payne Responds To Paid Stock Pushing Inquiry By Ducking Questions, Scrubbing Webpage
Charles Payne, a contributor and frequent guest host for Fox News and Fox Business, was compensated to promote the stocks of at least three companies since joining Fox. The practice of compensated stock endorsements is currently prohibited by Fox rules, and resulted in the recent contract termination of contributor Tobin Smith.
According to a Media Matters review, Payne was paid $40,000 to promote The Brainy Brands Company, "$25,000 by a third party" to promote NXT Nutritionals Holdings, and an undisclosed amount for a "consulting arrangement" to promote Generex Biotechnology Corporate.
The share prices of the companies Payne was paid to tout are now essentially worthless.
Payne forecasted lofty gains for investors who bought those stocks. He projected in 2011 that Brainy Brands could hit $4.50 a share in three years. At the time of the pitch, Brainy Brands was trading at around $1.35 -- it's now below 1 cent. Payne claimed in 2009 that NXT could "turn $10,000 into $25,000." At the time, NXT was trading for $2.00 -- it's now below 1/10th of a cent. And Payne claimed in November 2007 that Generex, then at $1.58, was a long term "screaming buy" which could hit $7.00. It's now trading at roughly 4 cents.
Aside from rosy projections, Payne's sponsored stock pitches shared a common theme: using his cable news and Fox credentials to assure skeptical investors that his advice was trustworthy. A direct marketing company which worked with Payne stated it brandished Payne's Fox News connections "to build credibility" with his potential customers. The stock pitches were also used as a vehicle to entice readers to join Payne's subscription newsletter.
Fox policy prohibits contributors from receiving compensation to promote a stock. MarketWatch -- which, like Fox, is owned by News Corp. -- reported on June 18 that a spokesman said "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." As a result of the rule, Fox News fired contributor Tobin Smith, who regularly releases sponsored research reports (Smith claimed his contract "did NOT include any exclusion from me or my company sponsored research").
While Fox currently prohibits financial arrangements like Payne's, it's not clear whether his actions specifically violated Fox rules. MarketWatch quoted Smith claiming that the rule was instituted in "late" 2012, or after the three Payne stock promotions studied in this report first occurred. It's also not clear if Payne has been compensated for stock promotions after 2011. Regardless, even if Payne's actions occurred before an official Fox policy, he still used Fox's brand to engage in practices that the network now thinks is problematic enough to prohibit and fire an employee.
Fox and Payne did not respond to requests for comment.
Payne and his company, Wall Street Strategies, have a problematic history related to the disclosure of paid stock endorsements. In 1999, the Securities and Exchange Commission (SEC) announced that while not "admitting or denying" wrongdoings, Payne "agreed to pay a civil penalty of $25,000." The SEC alleged of Payne:
The Complaint alleges that on at least eight occasions, Wall Street Strategies recommended that its clients purchase Members stock through recorded messages on its telephonic stock recommendation service. The Complaint also alleges that Payne failed to disclose that he received payments from Members to promote Members stock.
More about Payne's alleged actions are contained in this May 1997 SEC release.
In this report:
Who Is Charles Payne? Charles Payne is frequently seen on Fox News and Fox Business as a contributor and guest host. He has a regular segment called "Making Money with Charles Payne" which airs throughout the day on Fox Business. His Fox biography states he joined Fox "in October 2007." He founded Wall Street Strategies, "an independent stock market research firm where he serves as chief executive officer and principal analyst," in 1991.
Payne's Fox News and Fox Business appearances are routinely filled with misinformation on topics like the unemployment rate, unemployment insurance, climate change, corporate tax breaks, disability benefits, and federal worker compensation. He has attacked antipoverty programs by claiming "it gets a little comfortable to be in poverty"; said that "the good part about the stigma [of food stamps] is it actually does serve as an impetus to get people off" them; claimed poor people are "indebted servants" who believe society "owes" them; and said wealth disparity "really doesn't" bother me -- "in fact, it inspires me." He's also spoken at Tea Party rallies in recent years.
Payne's Wall Street Strategies offers "a complete suite of superior stock selection services that meet the needs of professional traders, active investors and long-term investors with horizons of one day to six months or more." The company's advertised services (account required) include a monthly newsletter ($159/year), "Hotline" Reports ($4,000/year) and "Swing Strategies" Reports ($4,800/year).
Payne And The Brainy Brands Company
[chart via Google Finance, accessed 6/21]
The Brainy Brands Company (ticker symbol: TBBC) is an education company which produces early education material such as DVDs, books, and games. Charles Payne pushed lofty investment goals for Brainy Brands, claiming it could turn "$10,000 into $33,300" and become "a market leader in the multibillion-dollar early education industry." Payne was paid $40,000 by a marketing group tied to Brainy Brands for the promotions.
Today, the company is virtually non-existent. Its website returns a hosting domain message stating, "This Site Is Under Construction and Coming Soon." Its stock is worthless, recently trading for $0.0028 a share with a market cap ( total value of issued shares) of less than $130,000.
To promote Brainy Brands, Payne setup a website -- now offline -- called PaynesEarlyEducationStock.com. The website carried a copyright date of 2011, and is accessible via the Internet Archive, which cached the site between July and December 2011.
A message signed by Payne on PaynesEarlyEducationStock.com stated that Brainy Brands could "help you profit 233%, turning $10,000 into $33,300"; "this million dollar company will shatter its sales numbers by 5,800%!"; and the company "stands to become a market leader in the multibillion-dollar early education industry." A chart listed the stock's "recent price" as $1.35 and projected its share price to rise to $4.50 in three years.
Payne's company website, wstreet.com, still contains material touting Brainy Brands. A signup page for Charles Payne's Insights & Trends newsletter tells news subscribers they'll receive a "FREE 10-day Bonus Report--Spotlight on a Winner: How Brainy Brands Is Poised to Take Over the Multibillion-Dollar Early Education Industry (a $19 value)."
Both PaynesEarlyEducationStock.com and wstreet.com contain links to a disclaimer -- now offline -- which stated that Payne was paid $40,000 for the "paid promotional advertisement of The Brainy Brands Company":
Disclaimer: This online report is for general information purposes only. Do not base any investment decision on information in it. Any price targets are academic theory and should not be relied upon. Charles Payne's Common Sense Newsletter is an independent circulation newsletter. This online report is a solicitation for subscriptions and a paid promotional advertisement of The Brainy Brands Company Inc. (hereafter the "featured Company"). Charles Payne's Common Sense Newsletter received forty thousand dollars, as an editorial fee, from Creative Direct Marketing Group, Inc., which it received from the featured Company. This company was chosen to be profiled after Charles Payne's Common Sense Newsletter completed due diligence on the company. Charles Payne's Common Sense Newsletter expects to generate revenue and new newsletter subscribers and valuable exposure, the amount of which is unknown at this time, resulting from the distribution of this report. Creative Direct Marketing Group, Inc. received fifteen thousand, eight hundred dollars from the Company, for the costs of creating and distributing this report in an effort to build investor awareness.
Among Payne's claims on PaynesEarlyEducationStock.com about Brainy Brands:
- "My research shows its impressive 5-part plan could send its sales soaring to $59 million over the next 2 to 3 years. This 5,800% increase could help you profit 233%, turning $10,000 into $33,300."
- "Brainy Brands could be the key to tripling your money...but only if you get in soon!"
- "For the reasons illustrated in the details of the 5-part plan, I believe that investors who beat Wall Street to the punch by getting in now could very well see gains of 233% over the next 36 months. There's no question that 233% returns are aggressive. And as any good investor knows, risk and reward go hand in hand. So while I urge you to take advantage of what I believe is an incredible buying opportunity, I also urge you to do so cautiously by limiting the amount of money you invest."
- "In the pages of my newsletter, Common Sense, I regularly feature bargain stocks such as Brainy Brands (TBBC)--stocks that can double or triple your money in 2 to 3 years."
- "In as little as 36 months, The Brainy Brands Company (OTCBB: TBBC) stands to become a market leader in the multibillion-dollar early education industry. Investors who get in now could enjoy returns of 233% once the company begins profiting from its aggressive 5-part marketing plan."
Payne's paid promotion of Brainy Brands was picked up by several "penny stock newsletters" archived on the penny stock site hotStocked.com. The penny stock newsletters trumpeted Payne's connection to Fox Business in its promotions:
- In September 2011, a message appeared in numerous penny stock newsletters -- carrying names like WallStreetPennyStock Advisors, Stock Castle, Obscure Stocks, and ShamrockStocks.com -- promoting Brainy Brands because it was endorsed by a Fox personality. The message stated: "Charles Payne, a contributor to FOX Business Network believes that the failure of American education has created an opportunity for investors to see TBBC at $4.50 over the next 36 months!!" The newsletters contained a picture of Payne next to Fox News' logo.
- A September 2011 message in "DAMN GOOD PENNY PICKS" stated: "TBBC has garnered endorsements from Charles Payne, a contributor to Fox Business Network, and from Bob Flaherty, a former senior editor at Forbes. Not bad at all."
- In July 2011, a message appeared in a penny stock newsletter promoting Brainy Brands and recommending readers "download financial guru Charles Payne's Insights and Trends" newsletter about Brainy Brands.
Payne And NXT Nutritionals Holdings
[chart via Yahoo! Finance, accessed 6/21]
NXT Nutritionals Holdings (ticker symbol: NXTH) was billed by Charles Payne in 2009 as a company producing a sweetener that could soon rival Splenda and whose stock could be a "400% winner" for investors.
Today, the company's website "is currently unavailable." Its stock is worthless, trading at around $.0006 -- 6/100s of a penny.
NXT issued a July 24, 2009, press release announcing Payne wrote a research report supporting their efforts. The headline of the release was: "Wall Street Veteran and FOX News Business Contributor, Charles Payne, Discusses NXT Nutritionals` SUSTA Product and Future Growth Opportunities."
The release touted Payne's Fox News credentials and quoted the CEO of the company saying, "As a veteran stock analyst and leading contributor to several business shows, we are pleased to relay Charles Payne's report to investors. Not only does the report examine the potential of NXT Nutritionals, it also provides timely analysis of the food and alternative sugar markets as well."
The last paragraph of the release stated: "Charles Payne has been paid $25,000 by a third party for this Research Report on NXT Nutritionals Holdings, Inc."
In addition to his sponsored research report, a Payne-authored pitch for NXT appeared on at least three separate websites: Afterthecrashwinners.com, Investafterthecrash.com, and Postcrashgains.com. The websites are now offline, but the Internet Archive cached the sites starting in 2009. The websites carried a 2013 copyright.
In the pitch, Payne claimed that the company stock "could hand you 150% gains in 18 to 24 months," "could be my next 400% winner" and "turn $10,000 into $25,000."
Among Payne's claims about NXT on the websites:
- "Invest in the next-generation sweetener that has the makers of Splenda® running scared."
- "Read on for 7 irresistible forces that have already doubled this stock and that could hand you 150% gains in 18 to 24 months!"
- "Get in now to turn $10,000 into $25,000."
- "For more on why I'm so confident that NXT Nutritionals Holdings, Inc. (NXTH.OB) could be my next 400% winner, claim your FREE copy of my new Special Report, How NXT Nutritionals Is Poised to Take Over the Multibillion-Dollar Sweetener Industry (a $39 value). It's yours FREE when you subscribe to Common Sense within the next 10 days."
- "I believe NXT Nutritionals (NXTH.OB) could be one of the fastest-rising stocks in 2009 and 2010. This is the kind of stock that once it gets moving could rally fast, so there's a sense of urgency to beat the crowds. Especially since I think this stock will skyrocket in the next few months."
A chart on the website claims that Payne originally recommended the stock at $1.00 on July 16, 2009, the "current stock price" is $2.00, and the "high projection" price is $5.00. The chart includes a note stating: "This is an aggressive recommendation with strong potential for rich returns. To minimize your risk, I recommend limiting your investment to no more than 5% of your portfolio."
In contrast to the press release disclaimer about Payne receiving "$25,000 by a third party," a disclaimer on Postcrashgains.com claimed that Payne "did not receive any direct compensation with respect to the writing of this online report" but hoped to receive "new subscriber revenue" for his newsletter:
Charles Payne's Common Sense Newsletter did not receive any direct compensation with respect to the writing of this online report. This stock was chosen to be profiled after Charles Payne's Common Sense Newsletter completed due diligence on the stock. Charles Payne's Common Sense Newsletter expects to generate new subscriber revenue, the amount of which is unknown at this time, to its newsletter through the distribution of this online report.
A user of the SiliconInvestor.com message board posted screenshots of a paper mailer he received of Payne's NXT pitch, which echoes the language used on Payne's pro-NXT sites. The poster said he received it on October 13, 2009.
Payne's endorsement is touted in an apparent ad for NXT posted online by an account called "nxthpr": "read what Wall Street researcher Charles Payne has discovered about NXT Nutritionals!"
Payne And Generex Biotechnology Corporate
[chart via Yahoo! Finance, accessed 6/21]
In November 2007, Charles Payne recommended Generex (ticker symbol: GNBT), a company involved in drug delivery systems and technology, as a long term "screaming buy" at $1.58 a share. When Payne made his recommendation, he was a consultant to the company for an undisclosed amount.
Today, Generex is trading at roughly $.04 a share with a market cap of roughly $18 million. Unlike the other stocks in this report, it at least has a fully functioning corporate website.
On November 15, 2007, Payne issued a report through Wall Street Strategies recommending Generex as a "long idea" for investors at $1.58. Payne claimed that the company recently received approval for a drug delivery system and "since then, the stock has drifted lower and in our estimation makes it a screaming buy." Payne added: "Currently, Oral-lyn is in phase III testing in North America. We expect that approval would automatically make this a $5.00 stock, but once sales begin we think the stock could move even higher (our 17 page institutional report has a share price target of $7.00."
In his report, Payne acknowledged that he was being compensated by the company, but didn't specify how much he was receiving: "We must note that after the last time we recommended the stock we heard from the company and have since entered into a consulting arrangement."
Generex released a November 15, 2007, press release highlighting Payne's report. The release stated that Payne "is a frequent guest on several well-respected finance-oriented radio and television programs." The release also acknowledged that "Generex has entered into a consulting agreement with Wall Street Strategies to provide this report and ongoing investor relations services" but did not note the amount.
Generex's Form S-3 filed with the SEC on April 30, 2008, lists Wall Street Strategies as a "selling shareholder," having sold 140,000 shares.
How Payne Used Fox News To Promote His Paid Stock Pitches A common theme among Payne's paid stock promotions is how his cable news and Fox credentials were used in an attempt to gain the trust of skeptical investors. A direct marketing company that says it did work for Payne wrote that it used Payne's Fox News connections "to build credibility" with potential Payne customers.
Creative Direct Marketing Group president Craig Huey wrote in a February 23, 2011, post that it made an advertising campaign for Payne partly based around his "great exposure as a regular commentator on the FOX Business Network and FOX News." The campaign aimed to "play up and expand on Charles Payne's credibility by positioning him as a trusted stock commentator who has dispensed profitable advice to millions on television, radio and through his Common Sense newsletter" and "created an envelope with a photo of Charles on TV to build credibility." A disclosure statement on PaynesEarlyEducationStock.com stated that Payne "received forty thousand dollars, as an editorial fee, from Creative Direct Marketing Group, Inc., which it received from" Brainy Brands. A screenshot on the firm's site also suggested the company helped with Payne's NXT work.
Payne's Fox credentials factored heavily in his paid pitch for NXT. The first line of Payne's pro-NXT website states: "Dear Cautious Investor, You may have seen me on FOX TV or heard me on the radio, commenting on the economy and giving my investment recommendations."
The top right hand corner of website promoting NXT has a picture of "TV personality" Payne on what appears to be Fox Business. Below the image reads: "Charles is a contributor to the FOX Business Network."
Payne also stated on the website: "My name is Charles Payne. I'm the CEO of Wall Street Strategies, Inc., an independent stock research company and editor of the investment newsletter Common Sense. I also appear frequently on the FOX Business Network and host my own radio show."
He later suggested that readers are getting advice that's too hot for TV, writing: "But when I'm on TV or radio, I have very little time to get into details of just a single stock idea, especially one that is meant to be a longer-term investment. ... because of limited air time, I can't tell viewers everything they need to know about hidden gems like this. ... Now you have a taste of the type of stocks I typically recommend...the ones I generally don't have time to mention on my radio show or when I'm appearing in a segment for the FOX Business Network."
Payne's cable news credentials were also used to sell Brainy Brands. As noted above, numerous penny stock newsletters touting the stock noted that it was recommended by a Fox analyst. Payne also referenced his "TV appearances" in explaining why he was enthusiastic about the stock: "Many investors believe that stocks like Brainy Brands are hard to come by, or reserved for a different class of investor. But that's not the case at all--I find great bargain stocks all the time. And while I cover some of these gems during my limited TV appearances, I simply can't talk about all of them."
Generex did not directly reference Fox in its November 2007 press release touting Payne's research report, but did note that he "is a frequent guest on several well-respected finance-oriented radio and television programs" and "is routinely sought after for his market opinions by several prestigious news organizations." Payne's Generex research report was issued through Wall Street Strategies, and the firm prominently plays up his Fox ties.
The front of Wall Street Strategies' website (accessed 6/21/13) features a Fox News banner logo and video of Payne on Fox:
The company's about page states that "Charles is featured throughout the day on the Fox Business Network" and "is a member and occasional host of 'Varney & Co'. In addition, he guest-host several shows including 'Cavuto on Business' and 'Your World'." Its media page features a sidebar of clips of Payne on Fox. A banner advertisement for Payne's Hotline newsletter contains a quote from Fox News host and senior vice president Neil Cavuto:
A customer testimonials page includes a quote from a customer saying, "my wife and I religiously follow you on the FBN and thoroughly enjoyed your recent book. Betwixt your online market commentary, FBN appearances and reading your book a couple (to 6 times...) these two Bostonians are finally gaining more confidence in our investments and long-term wealth creation strategies."
Wall Street Strategies is regularly mentioned when Payne appears on Fox News and Fox Business.
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Network/Outlet Fox Business, Fox News Channel
Person Charles Payne
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