Fox News has fired paid contributor and market analyst Tobin Smith for receiving compensation to promote the stock of Petrosonic Energy, a violation of network policy. According to a Media Matters review, Smith's company, NBT Equities Research, also received compensation for promoting numerous other companies through his website and conservative newsletters, and used his Fox News credentials to hawk volatile stocks to conservatives.
MarketWatch's Chuck Jaffe reported that Smith issued "sponsored investment research" to tout Petrosonic's stock in a 20-page mailer, for which NBT received $50,000. The paid endorsement is against Fox's policy that "no contributor to FBN [Fox Business Network], 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." In a post today on his website, Smith acknowledged that he is "no longer a Fox contributor" but defended his "business of sponsored research for uncovered emerging growth companies." He also wrote: "For the record, my last contributor agreement with Fox News did NOT include any exclusion from me or my company sponsored research. But that is water under the bridge."
MarketWatch -- which, like Fox News, is owned by News Corp. -- noted that companies hire people like Smith for sponsored research "to help small stocks find a market using fluff-and-shine hyperbolic chatter" at novice investors.
Smith's company produces voluminous quantities of sponsored content. In June alone, NBT's website has featured posts by Smith with compensation disclaimers for GlyEco ("200,000 options of GlyEco"), Petrosonic ("$50,000"), Brazil Minerals ($40,000), Barfresh Food Group ("$35,000 and 75,000 restricted shares"), and Pulse Beverage ("$50,000").
Smith also regularly pitches paid stock promotions to conservatives through right-wing email newsletters. Media Matters identified at least six recent instances in which Smith's NBT Group was compensated to promote a company's stock via Townhall.com newsletters. The companies include Medient Studios in 2013 ("225,000 shares"); BOLDFACE Group in 2013 ($50,000); IceWeb in 2012 ($50,000 via a third-party firm); Plandai Biotechnology in 2012 ("$30,000 monthly and 1.4 million shares for a one year"); Replicel Life Sciences in 2012 ("a fee of over $1000.00 in cash"); and Petrosonic in 2012 and 2013 ($50,000).
Since mid-December 2012, Smith has sent compensated Petrosonic advertisements to subscribers of email lists forTownhall.com, National Review, Dick Morris Reports, andCainTV, which is run by Fox News contributor Herman Cain.
MarketWatch wrote that Smith's Petrosonic advertising pitches ignored several problems with the company's finances, including its lack of revenues, "Petrosonic's rising losses, negative cash-flow and the 'going-concern letter' from auditors who think there is 'substantial doubt' in Petrosonic's ability to survive."
Other stocks that Smith promoted to conservative newsletter subscribers paint a similarly rosy picture of volatile companies with low share prices. At least two stocks are now virtually worthless: BOLDFACE Group closed yesterday at $.06 and IceWeb closed at $.02. Two other companies, Plandai Biotechnology and Replicel, are both trading at between approximately $.50 and $.65. And Medient Studios is trading at near $1 a share.
Smith's compensated emails advertised lofty stock returns. For instance:
- Smith recommended in January 2013 to buy BOLDFACE "now while you can still get them at less than 50-cents, and you could ... Turn $10,000 into $50,000 in the next 6-12 months!"
- Smith wrote of IceWeb in May 2012: "I cannot say it LOUD enough or STRONG ENOUGH: you SHOULD be buying shares of IceWeb (IWEB) NOW Under The .25-.30 per share valuation! ... I've been a tech nerd and research analyst for 20 years...and only a very FEW times have I found a company in the EXACT right place at the EXACT right time and the EXACT right value for me to make a 10X profit IN MY SLEEP over the next 9-12 months."
- Smith wrote of Plandai in May 2012: "PLPL trades today around .30. My projected growth for PLPL shareholders is around $3 over next 12 monthsfollowed [sic] by stunning capital gains potential for long term buy-and-hold investors."
- Smith wrote of Replicel in April 2012: "NBT Equities Research LLC, my equities research firm, holds a $10 price target for Replicel's stock post Phase II results...about 500% HIGHER from its stock price today."
(For more Smith pitches, go here.)
Smith Used Fox News' Brand For Stock Promotions
A look at Smith's website and newsletter emails shows that he cashed in on his Fox News credentials to hawk volatile stocks. When "massive profit seeking investors" visit NBT's site (accessed this morning), they're greeted by a note that Smith is a "Fox News & Fox Business Contributor."
Smith's bio touts his Fox News connections: "For the last twelve years, Mr. Smith has been an exclusive contributor and market analyst for Fox News and more recently Fox Business Network. He is the co-star of FNC's 'Bulls and Bears,' the #1 rated business program."
NBT's advertising media kit states: "Our founder, Tobin Smith, is a regular contributor at Fox Business Network and regular guest on Fox News Bulls & Bears. This adds to the NBT Equities Research brand's reach and brand equity."
Smith also used his cable news credentials in emails. In one instance, Smith claimed he was giving readers information that he was prohibited from sharing with Fox News viewers: "Obviously, the time to acquire shares in Replicel is BEFORE the next Phase I/IIa human trial results hit the tape--which is why I am writing you today! This is JUST the kind of next big thing investment I'd LIKE to be able to talk about on Fox News...but I can't. Replicel is too small (well at least for now) to share their exciting story with the 2 million investors who watch me every week on Fox's Bulls & Bears (Fox's rules, not mine.)."
When promoting Plandai, Smith wrote: "In a nutshell, here is why we so STRONGLY suggest the ground floor opportunity of buying and HOLDING Plandai (PLPL) shares below 50 cents. If you know me from my decades on cable news, you know ONE thing about me--I am a STRAIGHT shooter who calls 'em like I see 'em and NOT afraid to take a strong position when I KNOW Im [sic] right."
The following is a list of five stocks -- in addition to Petrosonic -- that Smith promoted through conservative newsletters in either 2012 or 2013 for which Smith's company received compensation.
Medient Studios (MDNT)
Disclosed Compensation: NBT was "compensated 225,000 shares for sponsored research and investor awareness services on behalf of Medient Studios, Inc ('MDNT') from a third party shareholder." [Townhall Spotlight email, 5/9/13, to Media Matters account]
Tobin Smith Claims About MDNT:
- "How This Movie Magician Turns Movie Bombs into Movie Gold for Early Investors in Medient Studios."
- When visionary founder/CEO of Medient Studio, Inc. (MDNT) Manu Kumaran showed me how he can turn a Box Office bomb into cash money gold ... I was sold."
- "Get our report today and see for yourself ... I'm investing in the Medient Advantage and I think with your aggressive growth money you should too ... NOW ... before the news gets to Wall Street."
Stock Price On 6/18 Closing: $1.05.
See Smith's email sent through Townhall.com's Spotlight here (image is composed screenshots of emails sent to Media Matters).
BOLDFACE Group (BLBK)
Disclosed Compensation: "NBT is paid fifty thousand dollars as an editorial fee from Beaumont Media LLC." [Townhall Spotlight email, 1/29/13, to Media Matters account]
Tobin Smith Claims About BLBK:
- "Put your aggressive growth money on the Kardasian sisters and their ONE HUNDRED million member social media list...buy BOLDFACE Group, Inc. shares (BLBK) today BEFORE they unleash their secret social marketing weapon to sell hundreds of millions of their Khroma brand cosmetics to their millions and millions fans worldwide."
- "Boldface Group (BLBK) is about to leverage the "viral power" of 100 million "socially-connected" Kardashian fans to make Khroma Beauty™ the NEXT red-hot, got-to-have-it celebrity product sensation!"
- "Buy shares of Boldface Group (BLBK), now while you can still get them at less than 50-cents, and you could ... Turn $10,000 into $50,000 in the next 6-12 months!"
- "Celebrities use social media to make millions. Now, thanks to the Boldface Group (BLBK) you can too!"
- "And buying shares of Boldface Group (BLBK) now, while you can still get them at less than 50-cents is the chance of a lifetime to cash in on the NEXT celebrity money machine! Owning shares of Boldface Group stock, (BLBK) opens the door for you to participate in the kind of celebrity profits that are usually available only to groupies, agents and rich friends."
Stock Price On 6/18 Closing: $.06.
Disclosed Compensation: $50,000 from "a 3rd party." [Townhall Spotlight email, 5/24/12, to Media Matters account]
Tobin Smith Claims About IWEB:
- "In short: I cannot say it LOUD enough or STRONG ENOUGH: you SHOULD be buying shares of IceWeb (IWEB) NOW Under The .25-.30 per share valuation!"
- "NOW that you understand just a little about what's happening in the world of Cloud Storage and Big Data Analytics...and the impact on data storage from the petabytes of data they create...you understand ALL you need to know to make a damn FORTUNE from this under 25 cents stock/ tiny $20 million market cap company." [emphasis in original]
- "As a micro cap publicly traded company they have ZERO coverage by IT analysts on Wall Street--that is the story for most EVERY IT stock under $500 million market cap. But it's exactly this LACK of visibility that allow you and I to purchase shares NOW at a ground floor valuation JUST as their fundamentals are about to EXPLODE."
- "Look...I've been a tech nerd and research analyst for 20 years...and only a very FEW times have I found a company in the EXACT right place at the EXACT right time and the EXACT right value for me to make a 10X profit IN MY SLEEP over the next 9-12 months...MORE if they hold out for the next 18-24 months and wait for the REALLY ENORMOUS payday."
Stock Price On 6/18 Closing: $.02
See Smith's email sent through Townhall.com's Spotlight here.
Plandai Biotechnology (PLPL)
Disclosed Compensation: "$30,000 monthly and 1.4 million shares for a one year issuer sponsored research and investor program." [Townhall Spotlight email, 5/23/12, to Media Matters account]
Tobin Smith Claims About PLPL:
- "We initiated coverage on Plandai Biotechnology (PLPL) with a Strong Buy and $22.50 Long Term Target implying 2300%+ UPSIDE from its current market price."
- "PLPL trades today around .30. My projected growth for PLPL shareholders is around $3 over next 12 monthsfollowed [sic] by stunning capital gains potential for long term buy-and-hold investors."
- "In a nutshell, here is why we so STRONGLY suggest the ground floor opportunity of buying and HOLDING Plandai (PLPL) shares below 50 cents. If you know me from my decades on cable news, you know ONE thing about me--I am a STRAIGHT shooter who calls 'em like I see 'em and NOT afraid to take a strong position when I KNOW Im right."
- "My equity research firm NBT Equities Research LLC STRONGLY believes Plandai Biotechnology will become the $Billion Next Big Thing in the nutritional foods industry."
- "Its our strongest Strong Buy recommendationwith a short term $2.50 targetand long term $22.50 target or 23X UPSIDE from under .50 price. 2300% UPSIDE from the next $billion nutritional food company."
- "Final question: What are you waiting for? BUY some shares NOW at the ground floor and DO NOT MISS this monster life changing investment opportunity." [emphasis in original]
- "P.S. Im forecasting a potential 10-bagger in PLPL shares over the next 12 months, but the longer term performance looks more like a 2300% move or better."
Stock Price On 6/18 Closing: $.51
See Smith's email sent through Townhall.com's Spotlight here.
Replicel Life Sciences, Inc. (REPCF)
Disclosed Compensation: NBT received "a fee of over $1000.00 in cash from Replicel Life Sciences, Inc. as compensation for the distribution of his advertisement." [Townhall Spotlight email, 4/12/12, to Media Matters account]
Tobin Smith Claims About Replicel Life Sciences, Inc.:
- "Just 6 Days Until This Public Company Reveals $BILLION Cure for Baldness."
- "Replicel Life Sciences, Inc. (REPCF) is now within just 6 trading days of receiving the first human Phase I/IIa trial results data on the world's first real cure for hair loss in men and women. NBT Equities Research LLC, my equities research firm, holds a $10 price target for Replicel's stock post Phase II results...about 500% HIGHER from its stock price today. Replicel has ALREADY recorded 50%+ hair growth in their pre-clinical trials--this is why we are so excited to see the NEXT set of clinical trial results."
- "Bottom-line: Time is VERY short and PROFITS look very big. I cannot think of a mass market multi-billion-dollar retail/lifestyle healthcare category with such a relatively low-cost/high-reward profile. All of which in my opinion makes NOW the time to build positions BEFORE human trial results are released in the next 6 trading days." [emphasis in original]
- "50%+ hair growth in 100% of their initial pre-clinical trials - 500% upside for the stock--this is why we are so excited to see the NEXT set of clinical trial results! You now have LESS than 6 trading days to acquire shares BEFORE the Phase I/IIa human trial results hit the tape - here's our full report of this exciting opportunity!"
Stock Price On 6/18 Closing: $.64