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Posts by Patrick Gallagher

4 things you thought you knew about Seeking Alpha that are wrong

The U.S. Securities and Exchange Commission brought a slew of enforcement cases last week against three penny-stock biotech companies and several stock promotion firms and their hired writers for publishing hundreds of fraudulent stock-touting articles between 2011 and 2014. The articles appeared on numerous investment news sites, most prominently on Seeking Alpha, the popular crowd-sourcing investment platform.

The SEC investigation uncovered multiple “pump and dump” schemes that “left investors with the impression they were reading independent, unbiased analyses on investing websites while writers were being secretly compensated for touting company stocks.”

For the biotech CEOs ordering up the fake stories, “…stock promotion, not drug development, was priority…

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6 steps for IR under the new Trump trade paradigm

President Trump’s campaign promise to recast America’s international trade relations in an aggressively protectionist mold has prompted many public companies to add new risk factors to their regulatory filings—and probably some new talking points for discussions with analysts and investors.

The president wasted no time in withdrawing the U.S. from the Trans-Pacific Partnership (TPP), scheduling meetings to begin renegotiating the North American Free Trade Agreement (NAFTA), and slamming Mexico, China, Japan and Germany for their trade and currency practices.

Although major business and agricultural groups had lobbied to salvage the TPP and warned about the dangers of withdrawing from NAFTA, Trump brushed aside these concerns along with 200 years of economic…

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Will the ‘Trump rally’ turn the passive investing tide?

Will 2017 be the year “the empire strikes back” in the war between active management and passive investing? 

Passive funds won the asset share battle again in 2016, as investors pulled a net $358.8 billion out of U.S.-based actively managed mutual funds in the 12 months to the end of November 2016, while pouring $479.8 billion into passive funds, according to Morningstar. Over the last three years, investors have moved more than $1 trillion into index funds.

The money has followed index funds’ razor-thin fees and years of outperformance. But that advantage is not a given. “Both investment philosophies have enjoyed multiple and sustained periods of outperformance over the past 30 years,” notes Daniel Farren, a Boston Partners senior portfolio analyst, among others,…

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Will the non-GAAP crackdown continue? Here are 4 clues

With hundreds of investor relations teams having dutifully revised their earnings presentations and other materials to comply with the new Securities and Exchange Commission guidelines on the use of non-GAAP financial measures, it may seem like the commotion is over, but that would be wrong.

That was the message from SEC officials speaking at an American Institute of CPAs conference December 5-7, 2016, in Washington, D.C., according to reports in the Wall Street Journal and elsewhere.

“Things had gotten pretty bad,” Mark Kronforst, the chief accountant in the SEC’s Division of Corporate Finance, told reporters at the conference, as quoted in MarketWatch.com. “We’re still cleaning up but there are a lot more comment letters to come.”

Speaking at the same…

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When is information material? 3 guidelines Wells Fargo failed to consider

The Wells Fargo debacle shone a bright light on one of the core aspects of investor relations: materiality. When is something important enough to a company’s business that it needs to tell investors?

Specifically, Wells Fargo did not publicly disclose that the Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency were investigating the bank’s abusive sales practices until the September 8 announcement of the settlement and enforcement action, which included $185 million in fines.  

Asked why the investigation had not been disclosed earlier, Wells Fargo Chairman and CEO John Stumpf told a U.S. Senate panel that the matter was “not a material event.”

In hindsight, the matter was about as “material” as an event can get. Through the…

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