Under fire, popular stock site makes changes
FORTUNE — The investing website Seeking Alpha is making changes to curtail the use of its site by stock promoters.
In a post on its website last week, Seeking Alpha’s editor-in-chief Eli Hoffmann said that the site was responding to recent “discoveries” and was “redoubling our efforts to identify and prevent stock manipulation.” Hoffmann said the company would actively monitor “a number of websites that keep running tabs on stocks that are being actively promoted.” Seeking Alpha didn’t say what websites it was talking about. Hoffmann said any articles about stocks that are “suspected of promotion” would have to be approved by Seeking Alpha’s managing editor before they were published.
Hoffmann said the website has no plans to abandon its policy of allowing contributors to post articles using pseudonyms. But he said Seeking Alpha would monitor IP addresses and do more background checks to make sure contributors weren’t able to post under multiple pseudonyms.
Seeking Alpha and other financial websites have recently come under fire for publishing articles by authors who were paid to promote the stocks they were writing about. A recent article on Fortune.com detailed how Seeking Alpha, Forbes.com, TheStreet.com, WallStCheatSheet, and others have removed hundreds of articles that appear to be part of the stock promotion schemes. Seeking Alpha was also the target of a suit by hedge fund manager David Einhorn to determine the name of one of its pseudonymous posters. Einhorn has since dropped the suit.
The issue of stock promoters has become a hot topic among the Seeking Alpha community. Hoffmann’s post on the matter was one of the most popular articles on the site on Friday. In his post, Hoffmann thanks Seeking Alpha contributor Richard Pearson for his “outstanding” work uncovering “foul play” on Seeking Alpha and other investing websites. A spokesperson for Seeking Alpha declined to comment about any legal matters arising from the recent allegations about promoters on its website.
Pearson says he is pleased with the changes Seeking Alpha is making. His article names other IR firms that he believes were involved in stock promotion. He says he has reported some of his findings to the Securities and Exchange Commission. “It’s good that they are letting people know that they will be monitoring IP addresses,” says Pearson. “I think that will put a big dent in the number of people who are trying to do this.”