Companies may pay people to write online newsletters recommending the stocks of these companies. Federal securities laws require the newsletters to disclose who paid for their product, the amount, and the type of payment. Many fraudsters fail to do so and instead masquerade their newsletters as sources of unbiased information, when in fact they stand to profit if investors follow their advice and purchase or sell certain stocks.
For more information, see:
- Investopedia: http://www.investopedia.com/university/scams/scams3.asp Investopedia describes newsletter investment scams.
- Securities and Exchange Commission (SEC): http://www.sec.gov/investor/pubs/cyberfraud.htm The SEC warns investors about online investment newsletters that offer seemingly unbiased information free of charge, but are actually tools for fraud.