Writers Affiliated With Seeking Alpha, Benzinga and Wall Street Cheat Sheet Charged by SEC

The U.S. Securities and Exchange Commission, whose first commissioner was stock promoter Joseph Kennedy (father of JFK), has announced a crackdown against alleged stock promotion schemes in which writers were secretly paid to post hundreds of bullish articles about public companies on financial websites.

Twenty-seven individuals and entities, including a Hollywood actress, were charged with misleading investors into believing they were reading "independent, unbiased analyses" on websites such as Seeking Alpha, Benzinga and Wall Street Cheat Sheet.

According to the SEC, many writers used pseudonyms such as Equity Options Guru, The Swiss Trader, Trading Maven and Wonderful Wizard to hype stocks.

The regulator said had it identified more than 450 problem articles, of which more than 250 falsely said the writers were not being paid.

"This is different from the fraud cases that you usually see us bring," Stephanie Avakian, acting director of the SEC enforcement division, said on a conference call.

"Here, we allege that the fraud was in presenting the analysis as impartial," she said. "It was bought and paid for."

The SEC filed fraud charges against three public companies and seven stock promotion or communications firms as well as two company CEOs, six individuals at the firms, and nine writers.

 Of those charged, 17 have agreed to settlements that include disgorgement or penalties ranging from approximately $2,200 to nearly $3 million based on frequency and severity of their actions.  The SEC’s litigation continues against 10 others.

Galena Biopharma Inc, ImmunoCellular Therapeutics Ltd and Lion Biotechnologies Inc agreed to pay more than $4.8 million, including fines and restitution, to settle, and to refrain from further wrongdoing.

The SEC filed lawsuits against the other 10 defendants in Manhattan federal court.

These defendants include Lidingo Holdings LLC, run by Kamilla Bjorlin, 46, an actress from Encino, California who performs under the name Milla Bjorn; and CSIR Group LLC, a New York firm overseen by Christine Petraglia, 49.

None of the websites was charged.

-RW 

(via Reuters and the SEC)