Eideard

Fox market analyst paid $50,000 to hustle investors

with 6 comments

tobinsmithpos

Most investors can’t tell the difference between “sponsored investment research” and independent analysis, and that’s exactly what the “sponsors” — typically small companies paying for a marketing campaign that will inflate their stock activity and value — are counting on.

The difference gets even tougher to figure out when the sponsor hires someone who is known for giving independent commentary colored only by his own feelings and research.

Think of it as a big, honking commercial, with a celebrity endorser.

Last week, that bought-and-paid-for stock endorsement was a 20-page mailer about Petrosonic Energy PSON…supported by an email campaign, featuring Tobin Smith, a money manager who has been a fixture on the television news shows for 15 years and who is a regular on the Fox networks, describing himself on Twitter as a “guest anchor.” According to Fox, he is “a contributing market analyst for Fox News Channel and a regular panelist on ‘Bulls & Bears.’ ”…

The people who contacted me considered buying the stock entirely based on Smith’s say-so, and the credibility he exudes in his Fox appearances. They didn’t appear to read the disclaimers of the campaign; had they bothered, they would have quickly found it was paid advertising for which Smith’s company pocketed $50,000.

This is a unique case because of how recognizable Smith is, and it brings into focus credibility questions that I’ve found most investors fail to answer even as they are deciding who they can trust. Fox’s official policy is that “no Contributor to FBN, nor his/her firm, and/or family members are allowed to accept financial consideration of any kind whatsoever to issue research, advertisements, or to otherwise promote individual stocks or securities,” a spokesman says. However, the network, which was unaware of Smith’s efforts on Petrosonic’s behalf until I contacted them, would not comment on the matter.

On Tuesday afternoon, though, Fox terminated Smith’s contract on the basis of its contributor policy, according to a spokesman. Smith, by text message, confirmed the news.

Asked earlier whether he had violated Fox’s rules, Smith said, via text message, “that policy was added late last year … my contract was not subject to that clause …”

I guess questions of ethics and legitimacy never entered discussions when the decision was made to take the money and run.

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Written by Ed Campbell

June 21, 2013 at 2:00 am

6 Responses

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  1. I’m surprised Fox just didn’t ask for an agency fee.

    moss

    June 21, 2013 at 5:55 am

  2. First let me say I’m glad this guy was fired – but – I just thought I’d toss this out there – the article says “Written by eideard” at the bottom. Yet word for word it is 100% taken from Wall Street Journal writer Mark Jaffe. I thought it might be a great place to consider the ethical dilemma this article about ethics creates.

    Edward C

    June 22, 2013 at 10:52 am

    • “Written by” is a problem with WordPress protocol that doesn’t differentiate between a post with a single source or author and a diarist piece like this and almost every single post at this site and many others commenting on news.

      If you clicked on the link in the article, you’d arrive directly at the full article at the BBC site. If you feel they copied it from the WSJ or vice versa, I suggest you harass them about it. There is a link like this in every post at this site which is commenting on source material from elsewhere.

      Further. my commentary or one of the other editors is differentiated as it has been for years by bold and italic formatting. Hopefully, readers can distinguish the difference between commentary and what is commented on. I also suggest reading the page linked up top “What this blog is all about”. I follow similar protocols at the other news commentary blogs where I am a contributing editor.

      eideard

      June 22, 2013 at 11:25 am

      • Glad you didn’t get too grumpy with the dude, Eid. This always happens a couple times a year with folks who just aren’t used to the diarist style.

        Though sites like BoingBoing and dvorak uncensored have been around for about a decade.

        moss

        June 22, 2013 at 2:27 pm

        • Thanks to both of you I learned two new things today. I didn’t know there was a diarist style that includes hyperlinks from the original article, which it sounds like has become an acceptable credit to the original author, as opposed to the traditional, “According to Mark Jaffe, ‘….”. I also now know WordPress and other sites don’t give options for distinguishing between author and diarist pieces. Thanks for your explanations.

          Edward C

          June 22, 2013 at 3:37 pm

          • We don’t think of it as new. I’ve been required to work to this format since I started with John C Dvorak’s Dvorak Uncensored in 2003 or 2004. I believe BoingBoing used the format before that.

            But, then, most folks – me included – have a set group of blogs/sites/feeds they stay in touch with, adding subtracting as time passes. If you haven’t bumped into this format before that’s no surprise. The world, online and offline, has a myriad of communications forms.

            Thanks for dropping back and catching the commentary. Thanks for being openminded.

            eideard

            June 22, 2013 at 3:52 pm


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