What can make an online investment newsletter fraudulent?

On Behalf of | May 12, 2023 | Firm News, Fraud

The Internet is a major venue for investment opportunities, and corporations can greatly increase their revenue through online stock recommendations.

Oftentimes these stock recommendations are included in newsletters posted on investment websites. These recommendations can be completely lawful, but sometimes these recommendations cross the line into investment fraud.

Lawful versus fraudulent recommendations

Most investment newsletters found on the Internet offer sound advice on where people should invest their money and when. Sometimes a corporation will pay the publishers of the newsletter to recommend that readers invest in their business.

These recommendations are not illegal if the newsletter states the name of the company that paid them, the amount they were paid and the form of payment. However, newsletters start breaking the law when they recommend an investment, but do not tell the truth about payments received and their past successes or failures.

An example of potential investment fraud

For example, a newsletter might state their investment recommendations were made independently, when in fact they stood to profit from an increase in the purchase of the suggested stocks.

This is considered an act of fraud even if the newsletter is posted on a valid website.

Investment fraud has moved online. It can be difficult for corporations wishing to promote their stocks in online newsletters and those who publish these newsletters on lawful websites to understand the difference between lawful recommendations and investment fraud.

It can be a gray area and a lot can depend on the specific language used in the newsletter. Knowing where the line is drawn between legal and illegal wording is essential.