Writers who use financial news sites to manipulate stocks

Chris Carey of ShareSleuth.com writes about a small army of writers, both real and imaginary, who have systematically posted hundreds of bullish analysis pieces about the same small companies across investment news sites such SeekingAlpha.com and MotleyFool.com.

Carey writes, “The headlines of many of those articles – as well as links to them — were picked up by the finance pages at Yahoo.com, Google.com and other frequently visited sites, amplifying their message. They also appeared in news summaries for the featured companies at Nasdaq.com. That’s the exchange where most of those stocks trade.

“We have been watching for more than a year, to determine how the articles originate, how the campaigns spread and how they help to boost share prices and trading volumes. Among other things, we found concentrations of stories in the days and weeks leading up to share sales, and just before and after mergers, acquisitions or other market-moving events. We also found waves of stealth promotion pieces that accompanied paid touting campaigns, financed by the featured companies or by third parties.

“We discovered nearly 40 instances where writers in the stealth promotion network posted three or more articles about the same Honig-backed company within a few days of one another. In many cases, they were the only writers posting stories about those stocks.”

Read more here.