Just got a mailing that sure looks like a newsletter called ”The Bottomline Newsletter”, with somebody called “John Person, Market Analyst, Editor” pictured at the top right.
To even a careful reader this appeared to be some sort of report on the prospects for a stock called GRPH which is a US graphite producer. But a look at the tiny fine print on page 6 reveals that John Person received $20,000 in cash compensation from Greenstone Media to “endorse this advertisement”, and that another payment of over *one million dollars* (say this with an Austin Powers accent please) was made as part of this advertising campaign.
My recommendation is that if you are going to buy *anything* you read the fine print!
Update: Wow, it appears this John Person fellow also participated in some sort of advertising scheme for the stock MDMC. Note the activity peaks about June (looks from online buzz like the MDMC Bottomline stock report and other promotions for that company came out about that time) and then the stock tumbles. http://www.nasdaq.com/symbol/mdmc/interactive-chart?timeframe=1y&charttype=line
Disclaimers state that the Bottomline newsletter people are not actively trading the stock so perhaps they stay clear of legal problems because they are just advertising it, even as this is a company that is supposed to be providing people with trading advice?
Back in the days of Rum Running and Joe Kennedy, “pumping and dumping” was a common stock swindle. Basically insiders would all agree to buy up shares of a stock (the pump), and after the price went very high as others “got in the deal” they’d all agree to sell out at the higher price which would send the stock price falling. By working together and agreeing how to proceed the insiders had a big edge. This activity used to be legal but is now a serious crime.
I’m not sure how this relates to modern media, but it appears that the idea behind these advertising campaigns is to pump up the stock price of companies.