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With the recent crackdown on political “fake news”, where a handful of media mega-corporations such as Facebook and Google have emerged as the ultimate arbiter of what is real or isn’t, in the process unleashing allegations of conflicts of interest, it was only a matter of time before the SEC got the hint and brought the hammer down. That time is now, because as Reuters reports, the SEC announced a crackdown against “pump and dump” stock promotion schemes in which writers were secretly paid to post hundreds of bullish articles about public companies on financial websites.

Some 27 individuals and entities 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.

The SEC said many writers used pseudonyms such as Equity Options Guru, The Swiss Trader, Trading Maven and Wonderful Wizard to hype stocks. It was not immediately clear if bearish “pseudonymous characters” were also responsible for talking down stocks.

While not as pervasive as alleged “fake news” in the political realm, the SEC said had it identified more than 450 problem articles, of which more than 250 falsely said the writers were not being paid.

Unlike traditional cases where the SEC alleges fraud, usually involving trading on inside information, in this case the crackdown is not against improper market information but misrepresentation of conflicts of interest and marketing.

“This is different from the fraud cases that you usually see us bring,” Stephanie Avakian, acting director of the SEC enforcement division, said on the conference call. “Here, we allege that the fraud was in presenting the analysis as impartial,” she said. “It was bought and paid for.”

Amusingly, the SEC also issued an alert warning investors that articles on investment research websites may not be objective and independent,and that they should never invest based solely on information published there.

Of course, the unspoken message is that anyone who buys, or sells, securities based on advice they acquired on some website, no matter how credible, deserves to lose all their money anyway.

Source:  Tyler Durden