Forbes discontinues penny stock ads, but IBD says it will keep running them

Davis Freeberg writes on the Seeking Alpha web site that ads have been running in BusinessWeek, SmartMoney, Forbes and Investor’s Business Daily about a penny stock with a questionable background. He e-mailed all four publications. BusinessWeek and SmartMoney didn’t reply, while Forbes said it would stop the ads. Investor’s Business Daily didn’t see a problem with the ad.

The Forbes reply was: “Thanks for your note- we obviously take this very seriously given our reputation in the industry. Just so you know Forbes.com and Forbes magazine are separate organizations with separate sales teams. I had some people here at Forbes.com run a check and it appears that we’ve never shown those ads online. I can confirm that there had been ads run in the print mag in the past but from what I’m told those are going to be discontinued.â€?

Freeberg wrote, “While, it’s unfortunate that Forbes ran the ad to begin with, I can understand how it could miss some of the details behind GrowthStockGuru’s tip. Digging through the SEC files was like peeling an onion; the more I read, the more I wanted to cry. Forbes’ willingness to re-evaluate the history of the company and its decision to discontinue future ads, demonstrates that, while careless, it does care enough about its readers trust to understand that the easy money isn’t worth the hit to its credibility.”

As for Investor’s Business Daily, Freeberg wrote, “After reading IBD’s email, I was really surprised to learn that advertising ‘classifieds’ of penny stocks is part of its business model. I’ve always thought of it as being one of the top five business publications for Wall St. investors. Unfortunately, I didn’t get to see the print ad personally, so I don’t know about the disclaimers there, but on its website, it’s still running the growthstockguru ads and I don’t see any disclaimers. In order to get to this ad, you click ‘corporate news’ from its home page and then you see a summary of the stocks being advertised. If you click through to the third page, you finally see an ‘advertising’ logo, identifying the piece as pay for post content.”

Read more here. Tom Anderson of Kiplinger’s wrote about these ads earlier this month.