The Deal: Microcap Stocks Get Undeserved Promotions
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.
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.