This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

The Deal: Microcap Stocks Get Undeserved Promotions

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. (XOM - Get Report), 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.
4 of 7

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
SIRI $3.89 0.00%
TST $1.65 -1.79%
YHOO $32.37 1.57%
XOM $80.03 1.05%
AAPL $109.50 -1.16%


Chart of I:DJI
DOW 17,050.75 +138.46 0.82%
S&P 500 1,995.83 +15.91 0.80%
NASDAQ 4,810.7880 +19.6360 0.41%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs