Newsletter Publisher Charged For Accepting Secret Payments
It is axiomatic that the publication of favorable articles can be quite helpful to the share price of stocks. This may be particularly true if the favorable article is published in a respected investment newsletter or another industry publication. The use of this approach to secure favorable publicity for certain issuers is at the center of a recent proceeding brought by the Commission, In the Mater of Christian Fernandez, Adm. Proc. File No. 99559 (February 20, 2024).
These proceedings revolved around articles published in Palm Beach Venture, an investment newsletter and related emails about two issuers. The newsletter is published by Palm Breach Research Group. Jonathan W. Mikula is the chief analyst and author of the publication. He has been previously been charged by the Commission in three cases, one of which is currently pending. SEC v. Mikula, Civil Action No. 2:22-cv-07096 (C.D. Cal. Filed September 30, 2022).
In 2020 and 2021 Mr. Mikula authored articles that were published in Palm Beach Venture and circulated, along with emails, touting Issuer 1 and Issuer 2, each of whom had shares that were OTC traded. Each firm is based in Canadian The articles and emails did not state that Palm Beach Venture was being paid to publish and circulate the articles or emails.
In fact, for Issuer I Respondent was paid $326,502.23 for the publication and circulation of the material. Similarly, Respondent was paid $280,000 for the publication and circulation of the material regarding Issuer II. Portions of the funds paid went to Mr. Mikula as his compensation. The Order alleges violations of Securities Act Section 17(b) and Exchange Act Section 10(b).
To resolve he proceedings, Respondent consented to the entry of a cease-and-desist order based on the Sections cited in the Order. He also agreed to pay disgorgement of $331,782.11 and prejudgment interest of $30,094.34. The funds will be held in an account by the Commission pending a decision if it will seek to distribute them or transfer the funds to the Treasury. A penalty was not imposed based on cooperation.