If you are a public company that has been a victim of what you perceive to be manipulation by the media, feel free to send us your documentation so we can include it in our investigative data base.
STOCK MANIPULATION AND THE MEDIA
EXCLUSIVE INVESTIGATIVE REPORT
The following is an assessment based on personal opinion and observations, expression of which are protected by the First Amendment of the United States Constitution, three years of specialized investigation, and information obtained from public records and sources.
Does the media play a role in manipulating stock prices? The answer of course would be yes, although the key point is, do they do it intentionally? As to the key point and in our own personal opinion, we would answer, of course. We base our opinion on the past three years of a complex investigation and extensive research. Do some research for yourself and take a look at what happened to a company called Genesisintermedia (OTCBB: GENI).
GENI is alleged to have paid off stock touts and analysts to promote their company in various forms of the media. This included giving a T.V. commentator several million dollars worth of stock to promote the company through the television medium, and by providing stock in their(GENI) company to a certain stock analyst.
The following information was taken from public records and class action lawsuits that have been filed against GENI:
The fraudulent scheme succeeded in driving up the price of Genesis stock 50% in December, 1999 as the public began reading glowing reports regarding Genesis issued by the analysts.
Similarly on February 8, 2000, Bloomberg TV announced that Genesis stock was expected to increase between 300% and 500%. Following that announcement, the price of Genesis Stock sharply increased nearly 80% from $2.21 to $3.92.
On February 25, 2000, CNBC announced that Genesis was a "Double your money pick." Following that announcement, the price of Genesis stock again increased nearly 80% from $5.48 to $9.33.
By February, 2000, as more false positive reports were disseminated to the public, Genesis stock soared nearly 80% on high volume trading. By March, 2000, the price of Genesis stock had risen more than 700% above the price the stock had traded at just months earlier.
On September 25, 2001, NASDAQ stunned investors by announcing that it was halting trading of GENI and issued the following press release:
The Nasdaq Stock Market(SM) announced that trading was halted in GenesisIntermedia, Inc.(GENI), today at 4:55 p.m., Eastern Time, for "additional information requested" from the company at a last price of 5.90. Trading will remain halted until GenesisIntermedia, Inc. has fully satisfied Nasdaq's request for additional information.
GENI subsequently began trading again and at the time of this writing, was trading on the pink sheets at .0001 per share, but there is a lot more to the story.
In early 2001, GENI was heavily shorted by what appears to be a group of organized shorter sellers. It is believed that the short interest began posting negative information on public message boards to drive the price down, but instead of dropping, the price continued to surge upwards. Then, a reporter for a major financial news service started to write a series of negative articles on the company. The articles accomplished almost immediately what the short sellers could not independently accomplish. Subsequently trading in the stock was halted and once it resumed trading, it was all but worthless. This is a text book example of how the media can push a stock upwards and on the other side of the coin, bring it down.
What happened to GENI is not uncommon, but is often a situation that goes unnoticed. One must always wonder what the motivation is of journalists who write slanted articles, either positive or negative. Are they reporting news or do they have other motivations or interests? Whatever the answer is, it is obvious that the media can have a direct influence on the value of publicly traded companies. It is also very obvious that the media can be influenced and corrupted.
Another company that has been directly affected by the media is a company called Wade Cook Financial (WADE). This is a company that has been relentlessly attacked by a certain journalist of a certain media organization. Their (WADE) stock price has plummeted in what many believe is a result of the numerous negative articles written about the company. Is it just a coincidence that the company had been heavily shorted over the course of the publication of the negative articles? What better way to bring down the price of a publicly traded company than to have "credible" media write negative articles about a company. Some observers have referred to the articles written about WADE as pure hatchet jobs. But, it is not only GENI and WADE that have been affected by the media, there are numerous companies that have experienced similar manipulation through organized "hatchet jobs". Most have bitten the bullet and others have fought back with litigation. At least one company had litigation pending in the appeals court, against one of the major financial news organizations, at the time of this writing.
Honest reporting of the news is an essential element of transparency, although, intentionally slanted reporting can be devastating to a public company. Our investigations have shown over the past several years that there exists a clear pattern of questionable activity by certain members of the media and these patterns of questionable activity have had a very negative effect on a number of publicly traded companies. In some of these isolated cases there appears to exist a direct link between certain "investigative" journalists and organized criminal activity; especially in the area of short selling.
Over the past year, we have received reports that certain journalists have been compensated by traders to write negative articles on companies. In fact we were told by a certain CEO, that he had been told that a certain "investigative" reporter had been paid $50,000 to write a negative article about his company, and the money was wired to the reporters bank account the day after the article was published. We have also obtained information that certain financial reporters had written articles and at the same time had maintained their own trading accounts, in more than one brokerage house. If this is in fact true(and we believe it to be), at the very least it would be unethical and at the very most it would be outright criminal. We have also interviewed "experts" that have been quoted in various slanted articles and they have clearly indicated that they had been misquoted by certain "investigative" reporters.
Does a conspiracy exist between stock manipulators and certain members of the media? In our opinion, most likely, yes.
The key point here is to not believe everything you read or hear in the media. Do your own due diligence and check out the facts for yourself.
If you are a public company that has been a victim of what you perceive to be manipulation by the media, feel free to send us your documentation so we can include it in our investigative data base.
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