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The effects of fake news on the practice of investor relations and financial communications

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The effects of fake news on the practice of investor relations and financial communications

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THE EFFECTS OF FAKE NEWS ON THE PRACTICE OF INVESTOR RELATIONS AND
FINANCIAL COMMUNICATIONS

by
Sue-Mae Watt

A Thesis Presented to the
FACULTY OF THE USC GRADUATE SCHOOL
UNIVERSITY OF SOUTHERN CALIFORNIA
In Partial Fulfillment of the
Requirements for the Degree
MASTER OF ARTS
(STRATEGIC PUBLIC RELATIONS)

May 2018

Copyright 2018 Sue-Mae Watt
ii
Table of Contents
I. Introduction………………………………………………………………………………........1
II. Secondary Research………………………………………………………………….…........3
Media Content Analysis………………………………………………………………......3
Conclusion………………………………………...............................................................7
III. What is Fake News?................................................................................................................8
IV. Fake News: Then Vs. Now.....................................................................................................14
Case Studies.......................................................................................................................17
Form 1 of Fake News: Individual Commentary....................................................17
Form 2 of Fake News: Paid Stock Promotions......................................................19
Form 3 of Fake News: Fake Official Documentation............................................21
Fake News and the U.S. Securities and Exchange Commission........................................25
V. Fake News and the Investor Relations Practice....................................................................28
Conclusion.........................................................................................................................39
VI. Primary Research..................................................................................................................41
Global Survey....................................................................................................................41
Survey Sample...................................................................................................................41
Survey Results...................................................................................................................44
Awareness of fake news within the investing industry……………….................44
Fake news’ impacts to investor relations or financial communication
practices.................................................................................................................47
Comparison of the fake news concern to other investor relations or
financial communication practice concerns……………........................................51
iii
Responsibility for the spread of fake news within the investing industry………....52
Satisfaction with the Securities and Exchange Commission’s efforts in
combating fake news………………......................................................................54
Fake news’ prevalence within the next five years……...........................................55
The new face of pump-and-dump schemes……….................................................56
Responsibility to combat fake news within the investing industry……………....57
The best way to address the issue of fake news within the
investing industry…………... ................................................................................59
VII. Analysis of Research Findings.............................................................................................62
Characteristics of the Typical Survey Participant..............................................................62
Research Findings..............................................................................................................62
VIII. Conclusion...........................................................................................................................74
IX. Industry Recommendations..................................................................................................78
1. Define “Fake News” ....................................................................................................78
2. Increase Awareness of Fake News Among IR and PR Industry Professionals............79
3. Improve Visibility of the SEC’s Tips, Complaints and Reporting Portal....................80
4. Educate Investors on News Literacy............................................................................81
5. Develop a Policy or Plan on How to Address Fake News............................................82
Example Document................................................................................................82
6. Implement or Maintain Effective Stakeholder Management.......................................84
Bibliography.................................................................................................................................89

iv
List of Tables
Table 1: Participants’ Region of Residence………......................................................................42
Table 2: Relevant Industries to Participants……….....................................................................44
Table 3: Top-Ranked Concerns About the Future of the Investor Relations or
Financial Communications Industry....….......................................................................51
Table 4: Satisfaction with the SEC’s Efforts in Combating Fake News......................................54
Table 5: The Cross-Section Between Awareness of Fake News Within the Investing
Industry and Years in Practice.......................................................................................63
Table 6: The Cross-Section Between the Awareness of Fake News Within the Investing
Industry and Participant Industries................................................................................65
Table 7: The Cross-Section Between Employer Market Capitalization and Awareness
of Fake News Within the Investing Industry.................................................................67
Table 8: The Cross-Section Between Employer Market Capitalization and Impacts of
Fake News on Job Tasks................................................................................................68

v
List of Figures
Figure 1: Experience Level of Participants……………................................................................42
Figure 2: Market Capitalization of Participants’ Employers…………….....................................44
Figure 3: Awareness of Fake News Within the Investing Industry…………………...................45
Figure 4: Awareness of Fake News through the 2016 U.S. Presidential Election........................47
Figure 5: Impacts of Fake News to the Investor Relations or Financial Communications
Industry..........................................................................................................................48
Figure 6: Impacts of Fake News to Job Responsibilities..............................................................49
Figure 7: Fake News Impacts in One Year...................................................................................50
Figure 8: Responsibility for the Spread of Fake News.................................................................53
Figure 9: Fake News’ Prevalence Within the Next Five Years....................................................56
Figure 10: The Modern Take on Pump-and-Dump Schemes.......................................................57
Figure 11: Responsibility to Combat Fake News.........................................................................58
Figure 12: The Best Method to Combat Fake News....................................................................61
Figure 13: Deloitte’s Stakeholder Identification Table................................................................86

vi
List of Appendices
A. Media Content Analysis…………….................................................................................92
B. Approved Statement for Use from Richard S. Levick, Esq………………......................100
C. Notes from Phone Interview with Evan Pondel………………........................................101
D. Approved Statement for Use from Noberto Aja..............................................................105
E. Survey Report**...............................................................................................................107
F. Participants’ Region of Residence by U.S. State..............................................................175
G. Participant Occupations...................................................................................................176
H. Fake News’ Impacts to Job Tasks....................................................................................178
I. Industry Concerns............................................................................................................179
J. Other Industry Concerns..................................................................................................180

*Disclaimer 1: Survey responses have not been edited—any spelling, punctuation and/or
grammatical errors are solely of the respondents.

*Disclaimer 2: Prior to completing the survey, respondents were informed they would remain
anonymous. To protect survey participants’ anonymity, any identifying information has been
whited out.

1
I. Introduction
The term “fake news” gained notoriety nationwide after its role in the 2016 U.S. presidential
election. Since then, and throughout 2017, there have been many reports published about fake
news entering the investing industry. From 2016 to 2017, there was a ~153% increase in reports
surrounding “fake news” and “investing”. A popular sentiment among these reports—fake news
is altering stock valuation. With the increased sophistication of technology and social media
becoming a communication norm, it is possible that these factors have played a role in moving
stock prices. How? As of late, there has been a shift from utilizing human stock pickers to
computer algorithms that not only pick stocks, but conduct trades, too. JP Morgan Chase
estimates human stock pickers make approximately 10% of daily trades, while computers make
the remaining 90%
1
. Additionally, a 2017 report released by Pew Research Center revealed that
67% of American adults now “get at least some of their news” from social media, a 62% increase
from 2016
2
. This raises the possibility of fake news that is published and/or distributed on social
media being viewed as accurate and credible.

There are a number of examples from the past few years that support media reports, that fake
news is altering stock prices. Some well-known examples include Google acquiring Apple, and
McDonald’s acquiring Chipotle. These fake reports caused a small jump in all four share prices
3
.

1
Renae Merle, “Why fake news is a problem for Wall Street,” The Washington Post, October 12, 2017,
https://www.washingtonpost.com/news/business/wp/2017/10/12/why-fake-news-is-a-problem-for-wall-street.

2
Leo Sun, “A Foolish Take: Pew says majority in U.S. get news from social media,” USA Today, October 28, 2017,
https://www.usatoday.com/story/money/media/2017/10/28/a-foolish-take-a-majority-of-americans-get-news-from-
social-media/106719508.

3
Nick Whigham, “Technical glitch leads to fake news of Google acquiring Apple,” News.com.au, October 11, 2017,
http://www.news.com.au/technology/online/technical-glitch-leads-to-fake-news-of-google-acquiring-apple/news-
story/5a649cff65afaf67d76783b516c91b4e; Nathan Bomey, “‘Fabricated’ news planted about McDonald’s,

2
Another example is Avon and Fitbit’s fake takeover bids, which saw Avon’s stock price jump by
15% and Fitbit’s by 5%
4
. If the word on “The Street” is an important factor that determines share
price, then it brings into question if, and how much, fake news has changed communication
between a publicly-traded company, “The Street”, and its shareholders.

The increase in news reports about “fake news” and “investing” over the past two years does not
provide a true representation of the extent fake news presents to the investing industry. Nor does
it highlight the changes or problems, if any, to investor and financial communication. The
purpose of the thesis is to establish how fake news has impacted the investor relations (IR) and
financial communication practices. Through primary and secondary research, the thesis will
ascertain:
1. How prevalent fake news is within the investment industry?
2. Has fake news impacted the way IR and/or public relations (PR) practitioners
carry out their job responsibilities?
3. What are IR and PR professionals’ predictions about the future of fake news?

What is expected on the following pages is extensive insight into how fake news has, or has not,
changed the IR industry, and IR and financial communication practices.

Chipotle,” USA Today, February 14, 2017, https://www.usatoday.com/story/money/2017/02/14/fabricated-news-
release-circulates-mcdonalds-chipotle/97914292.

4
Matthew Goldstein, “S.E.C. Charges Man in Bulgaria in Fake Takeover Offer from Avon,” The New York Times,
June 4, 2015, https://www.nytimes.com/2015/06/05/business/dealbook/sec-charges-bulgarian-man-in-fake-takeover-
offer-for-avon.html; Hannah Kuckler and Jessica Dye, “Fake Fitbit bidder charged over market manipulation,”
Financial Times, May 19, 2017, https://www.ft.com/content/3aa5bb1c-3cb9-11e7-821a-6027b8a20f23.

3
II. Secondary Research
Media Content Analysis
To launch the thesis, the author conducted a media content analysis of news articles about fake
news’ infiltration into the investing industry in order to determine the extent of the issue (refer to
Appendix A for the media content analysis). To ascertain how much content was available about
fake news in relation to investing, the author did a Google search using the terms “fake news”
and “investing”. A time period parameter of January 1, 2017 to December 31, 2017 was inserted.
The search garnered 96,800 results. These results represented any topics or themes to do with
“fake news” and “investing”. A search with the same terms from years 2016 and 2015 generated
38,200 results and 21,700 results, respectively. From 2015 to 2016, there was a ~76% increase in
reports concerning “fake news” and investing”. From 2016 to 2017, there was a ~153% increase
in reports to do with “fake news” and “investing”. This signifies two major increases of news
reports to do with “fake news” and “investing” over the past two years.

While there are many articles that have been published about the fake news within the investing
industry, the author chose to analyze articles specifically focusing on fake news’ entrance into
the investing industry or the effects fake news has had on the investing industry, as well as
articles published by mid- to top-tier media outlets. This is due to the large amount of coverage
and numerous angles approached by journalists. There are 18 articles published on news sites
that center around fake news entering the investing industry and the effects to the industry. All
articles, except one, were published within the first half of 2017. Media outlets that reported on
the topic of fake news infiltrating the stock markets include: Forbes, Financial Times, CNBC,
NBC, Business Insider, USA Today, Huffington Post, Benzinga, MarketWatch, NewsWeek, The

4
Washington Post, Kiplinger, Yahoo! News, Reuters, NASDAQ, Huffington Post, Barron’s, FOX
Business and Axios.

Aside from one article, which was posted by The Huffington Post, the published news articles
did not provide a definition of “fake news”. None of the articles explicitly stated what “fake
news” consisted of, either. Through observation and analysis of the 18 selected news articles, the
author of the thesis was able to establish three distinct classifications that fake news was referred
to in the media:
• Form 1: Individual Commentary
One form of fake news reported on was individual commentary, which appears as the
work of qualified freelance journalists or industry experts. It is disseminated through
digital or social means, such as social media and blogs, and business and finance news
outlets. Authors who post multiple fake news content tend to post content under
numerous pseudonyms.
• Form 2: Paid Stock Promotions
Another form of fake news referenced was paid stock promotions. This is where writers
or companies are paid to compose and submit news content that appears to be
independent investment analysis. It is not disclosed to readers that the published content
is written by a third-party or that the third-party is paid for such services.
• Form 3: Fake Official Documentation
The third type of fake news referred to was fake official documentation, such as press
releases and U.S. Securities and Exchange Commission (SEC) filings. Fake official
documentation is distributed in one of two ways. Materials are sent directly to media

5
outlets or submitted through the SEC’s Electronic Data Gathering, Analysis, and
Retrieval database (commonly known as EDGAR).

Of the three forms of fake news discovered by the author of the thesis, form two was referred to
the most with 12 references (~67% of articles), followed by form one with five references (~27%
of articles), and form three with two references (~11% of articles). One article was not included
in this count since the fake news cited was published by accident. It therefore did not fit the
criteria of any of the three forms of fake news.

There were numerous themes prevalent throughout the analysis of news content. Themes that the
articles focused on include: manipulation, fraudulence, disruptiveness, misguidedness,
unreliableness, illegitimacy, cautiousness, vulnerability, reliance, deceitfulness,
mischievousness, cunningness and dishonesty. For approximately 22% of the articles, the themes
also revolved around fake news’ role in the 2016 U.S. presidential election. The election was not
the main focal point of these articles, however.

While the general tone of the articles was negative (~66%), there were also neutral-toned articles
(~22%), a positive-toned article (~6%) and an article that possessed both positive and negative
tones (~6%). The positive-toned news articles relate to the low or no prevalence of fake news
within the investing industry.

The analysis of collected articles identified 14 parties or factors that contributed to the spread of
fake news within the investing industry. The parties and factors referenced are: Writers who

6
were paid to write fake bullish articles (9), scammers (6), the publicly-traded companies who
instigated the dissemination of fake news about themselves (4), social media (3), technology (2),
criminals (1), business news sites (1), misinformed or unreliable sources of information (1),
government-sponsored operators (1), PR and communication firms (1), computer algorithms (1)
and federal laws (1).

The main sentiments that were carried across media reports were:
1. The advancement of technology and rise of social media to communicate has made it
easier for scammers to distribute fake news;
2. Fake news is the new face of pump-and-dump schemes; and
3. Fake news is more likely to affect high frequency trading algorithms (HFTs) and penny
stocks.

Of the case studies cited in media reports, 21 publicly-traded companies were affected by fake
news. These companies are: McDonald’s, Chipotle Mexican Grill, Google, ICOA, Cynk
Technology, Avon, Fitbit, Zoomlion Heavy Industry Science and Technology, Herbalife, Bank
of America, Twitter, Emulex, Vinci, Audience, Sarepta Therapeutics, CytoGenix, Samsung,
Fingerprint Cards AB, Transdigm, Kraft Heinz, and Philips 66.

Fourteen companies were cited by the media to have played a role in distributing fake news.
These companies are: Associated Press (through a hack), Bank of America Merrill Lynch,
Pershing Square Capital Management, Lidingo Holdings, ImmunoCellular Therapeutics, Lion

7
Biotechnologies, CytRx, CSIR Group, DreamTeam Group, Mission Investor Relations,
QualityStocks, Dunedin, Lavos, and Galena Biopharma.

Fake news-effected companies operated across a wide range of sectors. Case studies cited were
predominantly in the technology sector (9). Other sectors that case studies operated in were the
restaurant (2), personal products (2), industrial goods (2), pharmaceutical (2), consumer goods
(1), oil and gas (1), manufacturing (1) and banking (1) sectors.

A wide range of sources, both professional and academic, were quoted in published news
articles. From professional backgrounds, chief investment officers, a fund manager, a director of
investing, an asset manager, a head of alternative assets, lawyers, a CEO of an analytics
company, an algorithm software developer, a managing editor of an investment news website
and a news reporter were referenced. From academic backgrounds, a professor of asset
management, a professor of finance, and a professor of law were interviewed. Individuals from
the SEC were also interviewed—the director of the SEC’s office of education, the director and
associate director of the SEC’s enforcement division, as well as an unnamed SEC spokesperson.

Conclusion
The data collected and analyzed from the media content analysis suggests that fake news within
the investing industry is prominent. The overall tone and sentiments expressed in the articles
were consistently negative. The quality of coverage was strengthened by high-profile case
studies cited; the amount of case studies; the wide range of sectors presented in case studies,
which suggests that fake news isn’t concentrated in a particular industry; and interview sources

8
that span across many relevant backgrounds. On top of this, there was a ~346% increase in
reports concerning “fake news” and “investing” over a two-year period (2015 to 2017).
However, what the data does not reveal is if fake news within the investing industry is a
widespread problem, or whether communication between publicly-traded companies, Wall Street
and investors has been affected. The media content analysis also strongly signifies that there is
no consistency in the media of what fake news entails. The author of the thesis was able to
provide clarity surrounding the matter and uncovered three forms of fake news through analysis
of the 18 news articles.

III. What is Fake News?
The lack of a “fake news” definition in media reports and from a governing body may be to do
with its currently-evolving nature. For a matter of context, “governing body” is defined as a
group of officials who draw up the rules that govern the actions and conduct of a body
5
. The
author acknowledges that while there may be a settled definition among other professional
groups, the author sought for a “fake news” definition that is recognized among the general
American public. One could not be found. This could explain why a “fake news” definition was
not present in media reports. While some official entities are starting to define the phrase, others
are still waiting to see how the term develops. Internationally, clarity surrounding fake news is
being sought after. In 2017, the United Kingdom parliamentary committee launched an inquiry

5
“governing body”, Definition of ‘governing body’, Collins English Dictionary, accessed March 23, 2018,
https://www.collinsdictionary.com/us/dictionary/english/governing-body.

9
into defining fake news and the Australian Senate committee announced their plans to examine
fake news as part of their Future of public interest journalism inquiry
6
.

Dictionary.com will be updating its references with a definition of fake news. According to Jane
Solomon from Dictionary.com, most people have been turning to dictionaries to look up the
definition of “fake news”. It happens to be one of the most common failed searches for the
Oxford English Dictionary
7
. Dictionary.com’s “fake news” entry will appear as “false news
stories, often of a sensational nature, created to be widely shared online for the purpose of
generating ad revenue via web traffic or discrediting a public figure, political movement,
company, etc.”
8
However, Dictionary.com does acknowledge that there are two different senses
of what fake news is, but have chosen to only define one so readers are exposed to the broader
sense of what fake news really is
9
.

Contrary to Dictionary.com, the Oxford English Dictionary and Merriam-Webster will not be
adding “fake news” to its dictionaries in the near future. Merriam-Webster believes that the term
is a self-explanatory compound noun—a combination of two distinct words that are both well-

6
“‘Fake news’ inquiry launched,” UK Parliament Website, accessed December 19, 2017,
http://www.parliament.uk/business/committees/committees-a-z/commons-select/culture-media-and-sport-
committee/news-parliament-2015/fake-news-launch-16-17/; “Terms of Reference,” Future of Public Interest
Journalism, Parliament of Australia, Accessed December 20, 2017, https://www.aph.gov.au/Parliamentary_
Business/Committees/Senate/Future_of_Public_Interest_Journalism/PublicInterestJournalism/Terms_of_Reference.

7
Katy Steinmetz, “The Dictionary Is Adding An Entry for ‘Fake News’,” TIME Magazine, September 27, 2017,
http://time.com/4959488/donald-trump-fake-news-meaning.

8
Steinmetz, “The Dictionary Is Adding An Entry for ‘Fake News’.”

9
Steinmetz, “The Dictionary Is Adding An Entry for ‘Fake News’.”

10
known and when used in combination, is easily understood
10
. They will not add the term to their
references until fake news can take on a definite and regularly used meaning that is independent
of the terms “fake” and “news”
11
. Oxford English Dictionary is keeping a close eye on the
phrase
12
. According to Oxford English Dictionary senior editor Craig Leyland, the meaning is
still evolving—the term is no longer a synonym for “false news” or “spurious news”, that it has
gained an additional layer of meaning since gaining recognition over the past year
13
. Leyland
articulated this is why the Oxford English Dictionary has not attempted to define “fake news”
yet
14
.

Journalists have been reporting on their take of fake news. Callum Borchers, from The
Washington Post, wrote that fake news once had a precise meaning—it referred to total
fabrications
15
. But once the phrase entered the political sphere, fake news was used to refer to
unfavorable reporting towards President Donald Trump
16
. “Conservatives—led by President
Trump—have hijacked the term and sought to redefine it as, basically, any reporting they don’t
like,” Borchers wrote
17
. Paul Chadwick, from The Guardian, also wrote about the role politics

10
“The Real Story of ‘Fake News’,” Merriam-Webster, accessed December 19, 2017, https://www.merriam-
webster.com/words-at-play/the-real-story-of-fake-news.

11
The Real Story of ‘Fake News’,” Merriam-Webster.

12
Katy Steinmetz, “The Dictionary Is Adding An Entry for ‘Fake News’,” TIME Magazine, September 27, 2017,
http://time.com/4959488/donald-trump-fake-news-meaning.

13
Steinmetz, “The Dictionary Is Adding An Entry for ‘Fake News’.”

14
Steinmetz, “The Dictionary Is Adding An Entry for ‘Fake News’.”

15
Callum Borchers, “‘Fake News’ has now lost all meaning,” The Washington Post, February 9, 2017,
https://www.washingtonpost.com/news/the-fix/wp/2017/02/09/fake-news-has-now-lost-all-meaning.

16
Borchers, “‘Fake News’ has now lost all meaning.”

17
Borchers, “‘Fake News’ has now lost all meaning.”

11
had played in positioning the “fake news” term. Chadwick believes it has led people to equate
flawed journalism with fake news, and that by doing so, it has destroyed a longstanding view that
democracies have relied on, “that there can be such a thing as shared approximation of truth
resting on verifiable facts and corrected or clarified incrementally.”
18

Based on the current environment, Chadwick drafted a “fake news” definition— “Fictions
deliberately fabricated and presented as nonfiction with the intent to mislead recipients into
treating fiction as fact or into doubting verifiable fact.”
19
Chadwick further explains his position
on fake news:
• “‘Fictions’ is meant to distinguish fake news from items which have a kernel of truth but
are exaggerated, out of proportion, in the cliché ‘sensationalized’;
• ‘Fabricated’ emphasizes the made-up, manufactured aspect of fake news;
• ‘Deliberately’ and ‘intent’ draw attention to how fake news is purposeful, and help to
show it is distinct from the flawed journalism that can result from haste, carelessness,
partiality, conflicts of interest or the successful spin of others;
• ‘Presented as non-fiction’ focuses on the premeditation and calculation which often seem
to characterize the originators of fake news, as distinct from the people who simply
spread it unthinkingly;
• ‘Mislead’ indicates seriousness of purpose and distinguishes fake news from, say,
entertainment, pranks or satire; and

18
Paul Chadwick, “Defining fake news will help us expose it,” The Guardian, May 12, 2017,
https://www.theguardian.com/media/commentisfree/2017/may/12/defining-fake-news-will-help-us-expose-it.

19
Chadwick, “Defining fake news will help us expose it.”

12
• ‘Treating fiction as fact’ and ‘doubting verifiable fact’ look to consequences. These seem
to be the two main political purposes of those who create fake news.”
20

Of the 18 news reports analyzed in the author’s media content analysis, only one news article
defined fake news. That article defined “fake news” as “misinformation or disinformation that
spreads through online media.”
21
This definition is unique to the other definitions mentioned
above, as it specifically states online media as the only source of distribution.

To determine how fake news is viewed from a PR standpoint, the author spoke with Richard S.
Levick, Esq., Chairman and CEO of the public relations firm, LEVICK. Levick defined “fake
news” as “something that is clearly untrue, deliberate, and done with purpose—it is very
different from a mistake and it is very different from what we think we know at a certain point in
time, only later to be proven a lie or inaccurate or a mistake.”
22
(See Appendix B: Approved
Statement for Use from Richard S. Levick, Esq.). In addition, Levick added: “Do not get
confused by the search of truth with the campaign to create alternative truth, to create fake
news.”
23
Levick believes we’ve gone from a democracy to a tribal state—we believe in whom
we know
24
. “The epistemology has changed— the study of truth—how we get information. We

20
Paul Chadwick, “Defining fake news will help us expose it,” The Guardian, May 12, 2017,
https://www.theguardian.com/media/commentisfree/2017/may/12/defining-fake-news-will-help-us-expose-it.

21
Taran Volckhausen, “Misinformed in the Age of Information: What is the ‘Fake News’ Impact on Stock Market
Prices,” The Huffington Post, February 22, 2017, https://www.huffingtonpost.com/entry/misinformed-in-the-age-of-
information-what-is-the_us_58add88ee4b0d818c4f0a4cb.

22
Richard S. Levick, email message to author, December 27, 2017.

23
Richard S. Levick, email message to author, December 27, 2017.

24
Richard S. Levick, email message to author, December 27, 2017.

13
used to gather information, then come to conclusions. Instead, epistemology has changed where
we start with conclusions and then find the data points to support what we already believe,”
Levick said
25
.

The assortment of definitions cited in this chapter indicates a high level of discrepancy between
individuals and entities of what fake news is. For there to be a clear definition of what fake news
encompasses, the author believes clarification is needed surrounding the following:
1. Is “fake news” news that is complete and total fabrication?
2. Is news that contains inaccurate reporting or poor sourcing/research considered “fake
news”?
3. Should sensationalism or exaggeration be considered “fake news”?
4. Does there need to be malicious intent behind the composition and/or distribution of
news for it to be considered “fake news”?

The author could not find a “fake news” definition specific to IR. Based on a review of other
definitions cited in this chapter, as well as consideration of the questions above, the author
defines “fake news”, as it relates to IR, as: News containing information that is partially or
completely fabricated, purposely created and/or distributed with the intent to mislead prospective
investors and exploit invested shareholders, for financial gain.
• “Partially or completely fabricated” means the news does not have to be false in its
entirety to misguide.

25
Richard S. Levick, email message to author, December 27, 2017.

14
• “Purposely created and/or distributed with the intent to mislead” means a conscious
decision has been made to deceive, by forming and/or circulating fictitious or half-
fictitious news material.
• “Intent to mislead prospective investors” means there was an effort to misguide
prospective investors with the goal of encouraging a misinformed investment decision to
be made.
• “Intent to exploit invested shareholders” means there was an effort to take advantage of
shareholders already invested in the stock penned about, with the goal of defrauding
them.
• “For financial gain” means all factors mentioned above were undertaken with the goal of
gaining financially. This does not necessarily mean that the creation and spread of fake
financial news resulted in monetary gain. Rather, what is important is that there was
intent to gain financially.

IV. Fake News: Then Vs. Now
Fake news has had a colorful history. While the actual “fake news” term is a fairly new term that
appears to have emerged around the end of the 19
th
century, the creation and dissemination of
fake news is not
26
. The fake news phenomenon is as old as the printing press, which dates back
to 1439
27
. In the 16
th
century, those who wanted “real news” looked to leaked government

26
“The Real Story of ‘Fake News’,” Merriam-Webster, accessed December 19, 2017, https://www.merriam-
webster.com/words-at-play/the-real-story-of-fake-news.

27
Jacob Soll, “The Long and Brutal History of Fake News,” POLITICO Magazine, December 18, 2016,
https://www.politico.com/magazine/story/2016/12/fake-news-history-long-violent-214535.

15
reports as reliable sources, until fake leaks started flowing through
28
. During the 17
th
century,
historians were verifying news, which further encouraged the use of influential scholarly news
sources throughout the century
29
.

As printing gained popularity, so did fake news. There were stories of sea monsters, witches and
claims that sinners were responsible for natural disasters
30
. Fake news in the political and
governmental realm made a comeback during the French Revolution
31
. Pamphlets were
distributed in Paris exposing details of the government’s budget deficit
32
. Shortly after,
pamphlets distributed by other political parties contained conflicting numbers
33
. By the 1800s,
fake news was used to instigate fear and violence against African-Americans through racial
sentiments
34
. The real turning point for objective journalism was in 1896 when Adolph Ochs
purchased The New York Times, with the aim to produce a facts-based newspaper that would be
utilized by wealthy investors, in turn, providing them with accurate and reliable business
information and news
35
. Over the past two decades, fake news became a pressing issue once
again when online news sites became a normal way to consume news.

28
Jacob Soll, “The Long and Brutal History of Fake News,” POLITICO Magazine, December 18, 2016,
https://www.politico.com/magazine/story/2016/12/fake-news-history-long-violent-214535.

29
Soll, “The Long and Brutal History of Fake News.”

30
Soll, “The Long and Brutal History of Fake News.”

31
Soll, “The Long and Brutal History of Fake News.”

32
Soll, “The Long and Brutal History of Fake News.”

33
Soll, “The Long and Brutal History of Fake News.”

34
Soll, “The Long and Brutal History of Fake News.”

35
Soll, “The Long and Brutal History of Fake News.”

16
In the November 2017 edition of the National Investor Relations Institute’s IR Update
publication, Evan Pondel wrote that with the domination of digital media outlets, there is no
accountability with today’s press
36
. “Decades ago, ‘correction boxes’ on page two of a
broadsheet newspaper were an effective source of accountability when a journalist misreported a
fact. Today, editors and reporters can change a digital story on the fly and republish without
anyone knowing there was a factual inaccuracy in the previous version of the story.”
37

More recently, the dissemination of fake news through social media gained momentum during
the 2016 U.S. presidential election campaign, where viral fake news received more engagement
than real news
38
. Columbia Law School’s Adolf. A. Berele, Professor of Law and director of the
Center of Corporate Governance at Columbia Law School, believes “old frauds never die, nor do
they fade away, rather, they mutate and morph into new configurations in response to new
opportunities.”
39
Akin to the introduction of the telephone paving the way for pump-and-dump
schemes, technology opened the doors for scammers to take advantage of algorithmic trading,
which usually targets micro- and small-cap stocks
40
. However, now with social media on the
scene, it is not just micro- and small-cap stocks that are being targeted anymore, big corporations
are just as susceptible.

36
Evan Pondel, “Maintaining Credibility Amid Fake News,” IR Update, November 2017, 10.

37
Pondel, “Maintaining Credibility Amid Fake News,” 10.

38
“‘Fake News’ and the EU’s response,” At A Glance, European Parliament, accessed December 20, 2017,
http://www.europarl.europa.eu/RegData/etudes/ATAG/2017/599384/EPRS_ATA%282017%29599384_EN.pdf.

39
John C. Coffee, Jr., “Cheating the Algorithm: The New “Pump and Dump” Fraud”, The CLS Blue Sky Blog,
accessed December 20, 2017, http://clsbluesky.law.columbia.edu/2017/07/24/cheating-the-algorithm-the-new-
pump-and-dump-fraud.

40
Coffee, Jr., “Cheating the Algorithm: The New “Pump and Dump” Fraud.”

17
Case Studies
Form 1 of Fake News: Individual Commentary
Audience, Inc. and Sarepta Therapeutics

In 2015, a federal grand jury in San Francisco indicted Scottish citizen James Alan Craig with
securities fraud
41
. According to the indictment, Craig set up Twitter accounts with names that
were similar to real market research firms for the purpose of manipulating stock prices
42
. Craig
issued false Tweets under @Mudd1Waters, to be associated with Muddy Waters Research, and
used its logo as the account’s profile picture
43
. He also set up the account @citreonresearc to be
associated with another market research firm, Citron Research, and issued fraudulent Tweets
from the account
44
. Again, he used the firm’s logo as the account’s profile picture
45
. Craig used
the @Mudd1Waters account to publish fake multiple tweets about San Francisco sound
technology company, Audience
46
. In one Tweet, Craig posted that Audience was being
investigated by the Department of Justice (DOJ) on rumored fraud charges
47
. Audience’s stock
price on the NASDAQ fell considerably due to Craig’s Tweets
48
. Audience’s share price fell

41
“Scottish Citizen Indicated for Twitter-Based Stock Manipulation Scheme,” FBI, accessed December 20, 2017,
https://www.fbi.gov/contact-us/field-offices/sanfrancisco/news/press-releases/scottish-citizen-indicted-for-twitter-
based-stock-manipulation-scheme.

42
FBI, “Scottish Citizen Indicated for Twitter-Based Stock Manipulation Scheme.”

43
FBI, “Scottish Citizen Indicated for Twitter-Based Stock Manipulation Scheme.”

44
FBI, “Scottish Citizen Indicated for Twitter-Based Stock Manipulation Scheme.”

45
FBI, “Scottish Citizen Indicated for Twitter-Based Stock Manipulation Scheme.”

46
FBI, “Scottish Citizen Indicated for Twitter-Based Stock Manipulation Scheme.”

47
FBI, “Scottish Citizen Indicated for Twitter-Based Stock Manipulation Scheme.”

48
FBI, “Scottish Citizen Indicated for Twitter-Based Stock Manipulation Scheme.”

18
from $12.25 per share to $8.87, a 28% drop, before trading was halted
49
. On the same day, Craig
used his girlfriend’s online brokerage account to purchase 300 Audience shares
50
. The day after,
he bought 100 more shares, then sold the 400 shares at a share price higher than the 300 he had
bought the day prior
51
.

Like Audience, Craig used the @citreonresearc account to Tweet false information about
Washington-based biopharmaceutical company, Sarepta Therapeutics
52
. Craig Tweeted that
Sarepta Therapeutics’ trial papers had been seized by the Food and Drug Administration (FDA),
which caused the share price to fall significantly
53
. Sarepta Therapeutics was trading at $29.30
per share and fell 16% to $24.50 after Craig’s Tweet
54
. Again, Craig used his girlfriend’s online
brokerage account to purchase 700 Sarepta Therapeutic shares and sold all the shares at a price
higher than what he bought them the day before
55
. Craig’s actions on both Twitter accounts
allegedly caused shareholders to lose in excess of $1.6 million
56
.

49
Jordan Maglich, “Fraudulent Stock Tweets Result in Civil And Criminal Charges For Scottish Man,” Forbes,
November 5, 2015, https://www.forbes.com/sites/jordanmaglich/2015/11/05/fraudulent-stock-tweets-result-in-civil-
and-criminal-charges-for-california-man/#28a8bfec3c42.

50
“Scottish Citizen Indicated for Twitter-Based Stock Manipulation Scheme,” FBI, accessed December 20, 2017,
https://www.fbi.gov/contact-us/field-offices/sanfrancisco/news/press-releases/scottish-citizen-indicted-for-twitter-
based-stock-manipulation-scheme.

51
FBI, “Scottish Citizen Indicated for Twitter-Based Stock Manipulation Scheme.”

52
FBI, “Scottish Citizen Indicated for Twitter-Based Stock Manipulation Scheme.”

53
FBI, “Scottish Citizen Indicated for Twitter-Based Stock Manipulation Scheme.”

54
Paul Murphy, “Fragile, gameable markets and a psychotic SEC,” Financial Times Alphaville, November 6, 2015,
https://ftalphaville.ft.com/2015/11/06/2144328/fragile-gameable-markets-and-a-psychotic-sec.

55
“Scottish Citizen Indicated for Twitter-Based Stock Manipulation Scheme,” FBI, accessed December 20, 2017,
https://www.fbi.gov/contact-us/field-offices/sanfrancisco/news/press-releases/scottish-citizen-indicted-for-twitter-
based-stock-manipulation-scheme.

56
FBI, “Scottish Citizen Indicated for Twitter-Based Stock Manipulation Scheme.”

19
Form 2 of Fake News: Paid Stock Promotions
Lidingo Holdings, LLC

Lidingo, a stock promotion company, owned and operated by Kamilla Bjorlin, a Hollywood
actress who performs under the stage name of Milla Bjorn, arranged the publication of over 400
articles centered around 11 publicly-traded companies to business and finance news websites
57
.
According to documents filed by the SEC in New York in April 2017, Lidingo received at least
$1 million in cash and equity for its services
58
.

Between 2008 and 2012, chief executive officer of ImmunoCellular Therapeutics, Manish Singh,
told Lidingo not to disclose that their writers were being paid to write about certain stocks
59
. In
an email from Singh to Lidingo in 2012, he acknowledged that disclosing payment for articles
would “raise a red flag for investors.”
60
At least 50 ImmunoCellular Therapeutics articles were
paid for
61
.

An example of such an article was published on Seeking Alpha in 2012, written by Vincent
Cassano, titled Another Revival could be in store for Immunocellular Therapeutics
62
. It was not

57
Chris Flood, “Fake news infiltrates financial markets,” Financial Times, May 4, 2017, https://www.ft.com/content
/a37e4874-2c2a-11e7-bc4b-5528796fe35c.

58
Flood, “Fake news infiltrates financial markets.”

59
Flood, “Fake news infiltrates financial markets.”

60
Flood, “Fake news infiltrates financial markets.”

61
Flood, “Fake news infiltrates financial markets.”

62
Flood, “Fake news infiltrates financial markets.”

20
disclosed to readers that Cassano had been paid indirectly to produce the written content
63
.
Cassano wrote that ImmunoCellular Therapeutics had produced a cancer treatment which was
less costly compared to its rival product, and it had gained approval from U.S. regulators
64
.
Following the publication of the article, ImmunoCellular Therapeutics share price rose from
$42.80 on the day of the article, to $152.20 by June 2012—a gain of 263%
65
. However, a
discouraging clinical update on the treatment saw its share price fall to around $2.23
66
.

This article was one of 200 articles that appeared on Seeking Alpha that did not contain
appropriate disclosure of payment between 2011 and 2014
67
. Other websites that were identified
to have articles without the appropriate disclosure include: Benzinga, Wall Street Cheat Sheet,
TheStreet, MarketPlayground, Investor Village, Investing.com, and Forbes
68
.

63
Chris Flood, “Fake news infiltrates financial markets,” Financial Times, May 4, 2017, https://www.ft.com/content
/a37e4874-2c2a-11e7-bc4b-5528796fe35c.

64
Flood, “Fake news infiltrates financial markets.”

65
Flood, “Fake news infiltrates financial markets.”

66
Flood, “Fake news infiltrates financial markets.”

67
Flood, “Fake news infiltrates financial markets.”

68
Flood, “Fake news infiltrates financial markets.”

21
Form 3 of Fake News: Fake Official Documentation
Avon Products, Inc.

In 2015, the SEC charged a Bulgarian man, Nedko Nedev, for filing fake takeover bids through
the federal database for filing securities documents, EDGAR
69
. Nedev tried to manipulate and
inflate the stock price of Avon, a beauty and personal care company, by submitting the fake
takeover bids after taking a position in the company
70
. The bid was submitted by two unknown
investment firms, which had been approved to file documents to EDGAR
71
. Nedev’s attempt to
manipulate the market and Avon’s share price saw the stock jump 20%, before Avon issued a
statement saying the offer was a hoax
72
. Nedev made tens of thousands of dollars in profit, along
with another fake takeover bid concerning Rocky Mountain Chocolate Factory
73
. Nedev used a
brokerage account in Bulgaria to trade shares and derivatives, as well as trading through Nevada-
based company, Strategic Wealth
74
.

Through an examination of fake news case studies surrounding the three forms of fake news, it is
apparent that securities fraud involving fake news was committed with ease. These examples
demonstrate that a high degree of technical expertise is not required to commit stock and

69
Matthew Goldstein, “S.E.C. Charges Man in Bulgaria in Fake Takeover Offer from Avon,” The New York Times,
June 4, 2015, https://www.nytimes.com/2015/06/05/business/dealbook/sec-charges-bulgarian-man-in-fake-takeover-
offer-for-avon.html.

70
Goldstein, “S.E.C. Charges Man in Bulgaria in Fake Takeover Offer from Avon.”

71
Goldstein, “S.E.C. Charges Man in Bulgaria in Fake Takeover Offer from Avon.”

72
Goldstein, “S.E.C. Charges Man in Bulgaria in Fake Takeover Offer from Avon.”

73
Goldstein, “S.E.C. Charges Man in Bulgaria in Fake Takeover Offer from Avon.”

74
Goldstein, “S.E.C. Charges Man in Bulgaria in Fake Takeover Offer from Avon.”

22
investment fraud. Case study one supports media sentiments that social media has made it easier
for scammers to commit securities fraud with fake news by allowing them to hide behind a
screen and maintain anonymity while posting content freely. Compared to other forms of
communication, social media is mostly unmonitored; social media companies rely on the
platform’s community to report inappropriate material. Social media is also unregulated by a
higher, governing body. The most notable repercussion of the unregulated nature of social media
was in 2016 during the presidential election campaign where Facebook was used “for political
mass manipulation of the world’s oldest democracy,” according to Professor Vasant Dhar from
New York University’s Stern School of Business
75
. The use of social media to commit securities
fraud with fake news falls in line with Professor Berele’s notion that “old frauds never die, nor
do they fade away, rather, they mutate and morph into new configurations in response to new
opportunities.”
76
Social media is the result of sophistication and advancement of technology.

While form one of fake news relies heavily on new digital media (social media) to distribute fake
news, form two and form three rely on the older digital media system (in this instance, online
news sites) to spread fake news. Social media may have paved the way for new forms of fraud to
take place and made it easier to commit it, but it has not overtaken older digital means. This is
evident in the data collected in the author’s media content analysis. Of the three forms of fake
news, form two—paid stock promotion schemes—was the most referred to form in media reports
(~67% of articles). This is a point of interest— financial fake news does not rely heavily on

75
Vasant Dhar, “Social media platforms present dangerous issues for society. They need to be regulated,” CNBC,
December 27, 2017, https://www.cnbc.com/2017/12/21/its-time-to-crack-down-on-facebook-and-twitter-
commentary.html.

76
John C. Coffee, Jr., “Cheating the Algorithm: The New “Pump and Dump” Fraud”, The CLS Blue Sky Blog,
accessed December 20, 2017, http://clsbluesky.law.columbia.edu/2017/07/24/cheating-the-algorithm-the-new-
pump-and-dump-fraud.

23
social media. There are more publicized instances of fake news occurring through a digital media
system that generally has strong vetting processes compared to a system that is unregulated. This
indicates that social media’s unregulated environment is not necessarily an attractant to
scammers. Rather, scammers see exploiting legitimate online news sites more effective; they do
not seem concerned about the vetting processes occurring in newsrooms.

Case study three demonstrates that individuals can upload filings into the SEC’s EDGAR system
with ease. To make a filing, one must provide EDGAR with an address and a letter signed by a
notary
77
. In the case of Avon (case study three), the addresses of the fake investment firms and
the notary letter were fake
78
. Once an individual has access to make filings for the company they
own, they can submit filings for any company
79
. In response to what happened with Avon, the
SEC released a statement saying its “filing system was a repository for what is filed, not what is
accurate.”
80
This brings into question the efficiency of the SEC’s EDGAR system—if the first
step of filing documents with the SEC cannot evaluate whether a filing is authentic or fake, then
it essentially allows fraud to take place.

Case study two demonstrates that securities fraud, in relation to fake news, is not only committed
by individuals, but also legal corporations. In this case, Lidingo, LLC (now dissolved).
Scammers can also be well-known individuals and people who are in trustworthy positions. A

77
Stephen Gandel, “Fake Warren Buffet filings shows the SEC still has a problem,” Fortune Magazine, September
25, 2015, http://fortune.com/2015/09/25/fake-warren-buffett-filing/.

78
Gandel, “Fake Warren Buffet filings shows the SEC still has a problem.”

79
Gandel, “Fake Warren Buffet filings shows the SEC still has a problem.”

80
Gandel, “Fake Warren Buffet filings shows the SEC still has a problem.”

24
Hollywood actress and a CEO were behind the fraudulent promotion of stocks in the Lidingo
case study.

The three case studies highlight six important factors when it comes to fake news and IR:
1. Social media has made it easier for scammers to commit fraud. However, it has not taken
over the use of older digital systems to defraud;
2. The SEC’s EDGAR is not efficient;
3. Monetary loss from securities fraud related to fake news can be substantial;
4. Securities fraud related to fake news takes place on an international scale;
5. Fake news can appear on reputable, well-known news sources; and
6. Securities fraud related to fake news can be committed by anyone or any entity of any
status.

A brief history of fake news indicates that fake news has had strong political ties for centuries. It
also demonstrates that as fake news comes and goes, it makes a return in a new, more
sophisticated form, and this is evident in the case studies cited. Nowadays, fake news targets
retail investors who rely on their own research to make investment decisions
81
. As more people
are accessing news through online sources and social media, this increases the chances of retail
investors being exposed to fake news. A 2017 survey conducted by The American Institute of
Certified Public Accountants (AICPA) indicates that Americans are worried about how fake
financial news will affect their financial decision-making. One-in-three Americans said fake

81
Evan Pondel, “Maintaining Credibility Amid Fake News,” IR Update, November 2017, 10.

25
financial news posed a serious threat to their decision-making
82
. Sixty-three percent said the
spread of fake news has made it more difficult to make critical financial decisions, with 40%
finding it more difficult to make decisions concerning investing in the stock market
83
. Fifty-one
percent of Americans expect fake news and misleading headlines to become more prevalent,
with over 30% expecting it to become much more common
84
.

Fake News and the U.S. Securities and Exchange Commission
On April 10, 2017, the SEC published a press release titled SEC: Payments for Bullish Articles
on Stocks Must Be Disclosed to Investors
85
. The press release centered around 27 firms and
individuals who were charged with fraudulent promotion of stocks who led readers to believe the
content they were reading was independent, unbiased analysis
86
. These articles were featured on
investing news websites and more than 250 articles were examined by the SEC
87
. It was also
alleged by the SEC that the writers of the articles were compensated to create bullish company
stock articles
88
. According to the SEC, deceptive methods were used to hide the true sources of
the articles from investors
89
. In one of examples the SEC provides, one writer wrote under his

82
“Fake Financial News is a Real Threat to Majority of Americans: New AICPA Survey,” AICPA, accessed
December 21, 2017, https://www.aicpa.org/press/pressreleases/2017/fake-financial-news-is-a-real-threat-to-
majority-of-americans-new-aicpa-survey.html.

83
AICPA, “Fake Financial News is a Real Threat to Majority of Americans: New AICPA Survey.”

84
AICPA, “Fake Financial News is a Real Threat to Majority of Americans: New AICPA Survey.”

85
“SEC: Payments for Bullish Articles on Stocks Must Be Disclosed to Investors,” Securities and Exchange
Commission, accessed December 20, 2017. https://www.sec.gov/news/press-release/2017-79.

86
SEC, “SEC: Payments for Bullish Articles on Stocks Must Be Disclosed to Investors.”

87
SEC, “SEC: Payments for Bullish Articles on Stocks Must Be Disclosed to Investors.”

88
SEC, “SEC: Payments for Bullish Articles on Stocks Must Be Disclosed to Investors.”

89
SEC, “SEC: Payments for Bullish Articles on Stocks Must Be Disclosed to Investors.”

26
own name, as well as at least nine pseudonyms
90
. With one of his personas, he claimed to be “an
analyst and fund manager with almost 20 years of investment experience.”
91
In another example
that the SEC provided, a stock promotion firm had some of its writers to sign non-disclosure
agreements, which prevented them from disclosing the compensation they received
92
.

The SEC’s stance on the matter is clear—writers must disclose any compensation. The acting
director of the SEC’s Division of Enforcement, Stephanie Avakin, affirmed that companies who
pay someone to publish or publicize articles about its stocks must disclose this detail to the
investing public
93
. Further, the associate director of the SEC’s Division of Enforcement, Melissa
Hodgman stated that “markets cannot operate fairly when there are deliberate efforts to reach
prospective investors with positive articles about a stock while hiding that the companies paid for
those articles.”
94
To reinforce their position on fake news, the SEC issued an alert warning
investors about articles appearing on investment news websites that appear to be from an
unbiased source or commentary may actually be part of undisclosed paid stock promotion
schemes
95
. The SEC encourages investors to carefully review all information material available
to an individual, conduct thorough research using multiple sources, have a sound understanding
of a company’s business, and if possible, try to verify what is being said about the investment

90
SEC: Payments for Bullish Articles on Stocks Must Be Disclosed to Investors,” Securities and Exchange
Commission, accessed December 20, 2017. https://www.sec.gov/news/press-release/2017-79.

91
SEC, “SEC: Payments for Bullish Articles on Stocks Must Be Disclosed to Investors.”

92
SEC, “SEC: Payments for Bullish Articles on Stocks Must Be Disclosed to Investors.”

93
SEC, “SEC: Payments for Bullish Articles on Stocks Must Be Disclosed to Investors.”

94
SEC, “SEC: Payments for Bullish Articles on Stocks Must Be Disclosed to Investors.”

95
SEC, “SEC: Payments for Bullish Articles on Stocks Must Be Disclosed to Investors.”

27
before making an investment decision
96
. The director of the SEC’s Office of Investor Education
and Advocacy, Lori Schock, pinpointed the motive of these writers was to profit at the expense
of investors
97
.

The SEC does not only alert investors about these articles appearing on websites, but to also be
aware of its possible existence on social media and through investment newsletters, online
advertisements, email, internet chatrooms, direct mail, newspapers, magazines, television and
radio
98
. The SEC also specifically references micro and penny stocks to be more susceptible to
stock promotion schemes— a message carried in a number of the articles analyzed in the
author’s media content analysis
99
.

Ms. Hodgman and Ms. Schock were both invited to take part in the thesis in the form on an
interview. Both declined the invitation.

The first main point of contact for shareholders to discuss their concerns and questions about a
company’s stock is the IR department. This makes IR and corporate communication practitioners
one of the first parties within a publicly-traded company to deal with fake news repercussions, if

96
“INVESTOR ALERT: BEWARE OF STOCK RECOMMENDATIONS ON INVESTMENT RESEARCH
WEBSITES,” Securities and Exchange Commission, accessed December 20, 2017. https://investor.gov/additional-
resources/news-alerts/alerts-bulletins/investor-alert-beware-stock-recommendations.

97
SEC, “INVESTOR ALERT: BEWARE OF STOCK RECOMMENDATIONS ON INVESTMENT RESEARCH
WEBSITES.”

98
SEC, “INVESTOR ALERT: BEWARE OF STOCK RECOMMENDATIONS ON INVESTMENT RESEARCH
WEBSITES.”

99
SEC, “INVESTOR ALERT: BEWARE OF STOCK RECOMMENDATIONS ON INVESTMENT RESEARCH
WEBSITES.”

28
it were to occur. Fake news has the ability to alter how shareholders view a publicly-traded
company and its management, and the word on “The Street”. It is the role of IR and corporate
communication practitioners to effectively manage strategies surrounding those three factors
during such crises.

V. Fake News and the Investor Relations Practice
The National Investor Relations Institute, commonly known as NIRI, defines “investor relations”
as the “strategic management responsibility that integrates finance, communication, marketing
and securities law compliance to enable the most effective two-way communication between a
company, the financial community, and other constituencies, which ultimately contributes to a
company’s securities achieving fair valuation.”
100
Thus, IR practitioners control the flow of
information between a publicly-traded company and its shareholders, and this flow is how the
word on “The Street” is created
101
. However, fake news has the ability to disrupt this flow.

IR and corporate communication practitioners are responsible for creating and presenting
investment messages that align with a company’s mission, vision and values to the investment
community
102
. Messaging also centers around company management, company performance and
future plans
103
. Larkin states the four major areas that the IR function contributes to is: securities

100
“Definition of Investor Relations,” About NIRI, NIRI, accessed December 21, 2017, https://www.niri.org/about-
niri.

101
“The Importance of Investor Relations,” Role of Investor Relations, CFI, accessed December 21, 2017,
https://corporatefinanceinstitute.com/resources/careers/jobs/role-of-investor-relations.

102
“Investor relations officer job description,” Accounting Tools, accessed December 21, 2017,
https://www.accountingtools.com/articles/2017/5/14/investor-relations-officer-job-description.

103
Accounting Tools, “Investor relations officer job description.”

29
valuation, trading volume, analyst coverage, and relationship with the investment community
104
.
Below are a list of IR tasks and responsibilities, but are, however, not limited to:
1. Creating communication materials, such as presentations and press releases, for earnings
releases, industry events, and presentations to analysts, brokers, and investors;
2. Managing the production of annual reports, SEC filings, and proxy statements;
3. Managing the IR section of a company’s website;
4. Monitoring analyst coverage and media reports;
5. Serving as the key point of contact within the investment community;
6. Organizing events such as conferences, road shows, earnings conference calls, and
investor meetings;
7. Providing regular feedback to management regarding the investment community's
perception the company—how it is being managed and their views of its financial results;
8. Establishing the optimum type and mix of shareholders by creating targeting initiatives;
9. Representing the investor community in the development of corporate strategy; and
10. Establishing and monitoring performance metrics for the investor relations function
105
.

Out of the four IR functions outlined by Laskin, the author believes that securities valuation and
trading volume are most at risk of being affected by fake news, whilst analyst coverage and
relationships with the investment community may be affected to a lesser degree.

104
Alexander V. Laskin, “The Value of Investor Relations: A Delphi Panel Investigation,” PhD diss., University of
Florida, 2007.

105
“Investor relations officer job description,” Accounting Tools, accessed December 21, 2017,
https://www.accountingtools.com/articles/2017/5/14/investor-relations-officer-job-description.

30
The Farlex Financial Dictionary defines “security valuation” as: “The process of determining
how much a security is worth.”
106
Information that helps determine the worth of a security
includes financial results, information and updates about company management, and the
company’s future plans
107
. Because security valuation is dependent on news that is specific to a
publicly-traded company’s performance and/or plans, false or misleading information about the
company has the potential to alter security valuation, and this was seen in case study one and
three cited in the previous chapter of the thesis.

Laskin states that “the benefit of an effective investor relations program is increased trading
volume of securities.”
108
An effective IR program includes providing shareholders with up-to-
date, timely information about a company
109
. If an IR team delivers favorable news about a
company, new investors may take a stake in the company, or current investors may hold or
increase their position. However, if unfavorable news is published, the opposite effects may be
seen. Because security valuation is closely linked with trading volume, and security valuation is
reliant on company news, it is highly probable that fake news about a publicly-traded company
can affect trading volume. Again, case study one and three exhibited changes in trading volume
that resulted in the scammers profiting financially.

106
“Security valuation,” The Farlex Financial Dictionary, accessed February 25, 2018, https://financial-
dictionary.thefreedictionary.com/Security+Valuation.

107
Alexander V. Laskin, “The Value of Investor Relations: A Delphi Panel Investigation,” PhD diss., University of
Florida, 2007.

108
Laskin, “The Value of Investor Relations: A Delphi Panel Investigation.”

109
Ellie Cachette, “5 Steps to Good Investor Relations,” Inc. Magazine, November 12, 2013,
https://www.inc.com/ellie-cachette/springboard-five-steps-to-good-investor-relations.html.

31
It is possible that analyst coverage and relationships with the investment community may be
affected by fake news. However, it does not pose a serious threat. Because the task of a financial
analyst is to provide analysis of a publicly-traded companies and its sector, it can be assumed
that, as providers of news, the majority of financial analysts fact check and check their sources
before publishing their analyses. What cannot be assumed is that all financial analysts undertake
this process, which is how fake news has the potential to affect analyst coverage.

“Markets do not run on money; they run on trust.”
110
Building relationships with shareholders
can increase investors’ confidence and trust in a publicly-traded company, thus, information
about the company can be interpreted through these relationships lenses
111
. In the case where a
publicly-traded company does not have a good relationship or has a mediocre relationship with
its shareholders, news that does not come from the company first or is not verified by the
company may be taken at face value. Compared to companies with an exceptional relationship
with its shareholders, their shareholders are more likely to not acknowledge information from
news sources unless it has been broadcast or recognized by publicly-traded company itself.

It is important to note that with analyst coverage and relationship with the investment
community, fake news is not created. Rather, underlying issues, such as, but not limited to,
unprofessionalism and poor stakeholder engagement, can lead to the distribution of fake news,
even though there was no intent to deceive or misguide.

110
Alexander V. Laskin, “The Value of Investor Relations: A Delphi Panel Investigation,” PhD diss., University of
Florida, 2007.

111
Laskin, “The Value of Investor Relations: A Delphi Panel Investigation.”

32
According to a 2017 report released by Pew Research Center, 67% of American adults “get at
least some of their news” from social media, which is a 62% increase from 2016 data
collected
112
. Additionally, 45% of U.S. adults said they use Facebook as a news source
113
. On the
contrary, a survey conducted by NIRI in 2016 titled Social Media for Investor Relations,
discovered 72% of IR professionals did not did not use social media for work purposes
114
. When
asked why they were not utilizing social media, it was due to a “lack of interest in the medium by
the investment community.”
115
BNY Mellon’s 2015 survey on global IR trends indicated that
30% of publicly-traded companies (54% of mega cap companies) used social media for IR
purposes
116
. When asked why they were utilizing social media, it was because they saw social
media as a way to interact with current and potential investors and analysts, control company
messaging, and increase traffic to the company’s corporate website
117
. It also mentioned that it
served as a tool for crisis communication as it provided a real-time method for communicating to
various stakeholders
118
.

In a 2015 Greenwich Associates report titled Institutional Investing in the Digital Age: How
Social Media Informs and Shapes the Investing Process, the study revealed that institutional

112
Leo Sun, “A Foolish Take: Pew says majority in U.S. get news from social media,” USA Today, October 28,
2017, https://www.usatoday.com/story/money/media/2017/10/28/a-foolish-take-a-majority-of-americans-get-news-
from-social-media/106719508.

113
Sun, “A Foolish Take: Pew says majority in U.S. get news from social media.”

114
“What’s the Role of Social Media in Investor Relations?” News, Equities.com, accessed December 21, 2017,
https://www.equities.com/news/what-s-the-role-of-social-media-in-investor-relations.

115
Equities.com, “What’s the Role of Social Media in Investor Relations?”

116
Equities.com, “What’s the Role of Social Media in Investor Relations?”

117
Equities.com, “What’s the Role of Social Media in Investor Relations?”

118
Equities.com, “What’s the Role of Social Media in Investor Relations?”

33
investors rely heavily on social media, along with traditional media, when making investment
decisions—nearly 80% of institutional investors use social media as part of their regular
activities
119
. Of the survey respondents who indicated they used social media for business
purposes, 30% reported that information they had gathered on social media had influenced their
investment decisions
120
. While the Greenwich Associates report uncovered that most institutional
investors use social media to gather investment information, the NIRI survey indicates IR
professionals had no interest in engaging with investors through social media
121
. It is important
to note of the discrepancy between the two parties. This provides another explanation as to why
fake financial news does not rely on social media—for the IR and corporate communication
professionals who do use social media, it is used for strategic communication rather than
informing investors of what is trending or spreading. Any other information besides this, the
legitimacy could come into question. It is also important to highlight that financial news obtained
on social media is consumed in conjunction with traditional media sources; social media is not
solely relied upon as the only or main source for financial news.

With an abundance of news material shared across social media posts, blogs and traditional news
media outlets, it is impossible for IR and corporate communication professionals to monitor, flag
and take action on every single article that is fake. Then when one does come across a false
article, there is the question of how and when to respond to it.

119
“What’s the Role of Social Media in Investor Relations?” News, Equities.com, accessed December 21, 2017,
https://www.equities.com/news/what-s-the-role-of-social-media-in-investor-relations.

120
Equities.com, “What’s the Role of Social Media in Investor Relations?”

121
Equities.com, “What’s the Role of Social Media in Investor Relations?”

34
In an interview with Evan Pondel, president of investor relations and public relations firm,
PondelWilkinson, Pondel said choosing whether to respond to fake news or not is a tricky
situation
122
(See Appendix C: Notes from Phone Interview with Evan Pondel). “As soon as you
start responding to fake reports, you give credibility to that story. I think you have to pick your
battles,” Pondel said
123
. Pondel believes if news is really driving stock down and there is
falsehood that needs to be clarified, then a response is required
124
. “There’s different ways to
respond—you could Tweet about it, put out a press release, draw up a Facebook post, add a
comment to the comment section of the article. But you have to understand that when you do
that, and you’re engaging with these people, then you have to accept responsibility for that
engagement.”
125
Pondel expressed that by responding, you are setting a precedent where people
will expect you to comment on future news that is fake
126
. “You will have to rationalize to
investors why you responded to one fake news report, and not the other, and that’s where it gets
tricky. Your job as a communicator is to mitigate the damage, and if you respond, you might be
creating more damage.”
127
How do you address fake news in the most effective manner without
creating more waves? Pondel believes, it is hard to do, but if one does decide to respond, the best
way to address fake news is to address the issue in a neat, tidy manner and then let it heal
128
.

122
Evan Pondel, phone call with author, November 10, 2017.

123
Evan Pondel, phone call with author, November 10, 2017.

124
Evan Pondel, phone call with author, November 10, 2017.

125
Evan Pondel, phone call with author, November 10, 2017.

126
Evan Pondel, phone call with author, November 10, 2017.

127
Evan Pondel, phone call with author, November 10, 2017.

128
Evan Pondel, phone call with author, November 10, 2017.

35
Pondel himself has dealt directly with the effects of fake news through his client, Monster
Beverage Corporation (NASDAQ: MNST)
129
. A day trader Tweeted the Monster Beverage
headquarters was being raided by the Federal Bureau of Investigations (FBI)
130
. The day trader
also referenced Associated Press in his Tweet, making the information look like it was coming
from a legitimate news source
131
. The individual was attempting to make the stock price go
down, so he could sell it
132
. He had a short position; he was betting that the stock price would
fall
133
. After the Tweet was published, the stock started trading down by 10%
134
. Bloomberg
reporters called Pondel for more information, to which Pondel responded that he was not sure
what was going on
135
. Monster Beverage confirmed with Pondel that it was a false rumor
136
.
“We responded to that via Twitter because I knew the reporters were working off that medium,
and we also didn’t want to blow it out of proportion either, so we thought it was easier for us to
put out a quick Tweet out there about it being a false rumor,” Pondel said
137
. “In that situation, it
was self-contained, but sometimes, it’s not always clean or self-contained.”
138
The individual
was pursued by the SEC
139
.

129
Evan Pondel, phone call with author, November 10, 2017.

130
Evan Pondel, phone call with author, November 10, 2017.

131
Evan Pondel, phone call with author, November 10, 2017.

132
Evan Pondel, phone call with author, November 10, 2017.

133
Evan Pondel, phone call with author, November 10, 2017.

134
Evan Pondel, phone call with author, November 10, 2017.

135
Evan Pondel, phone call with author, November 10, 2017.

136
Evan Pondel, phone call with author, November 10, 2017.

137
Evan Pondel, phone call with author, November 10, 2017.

138
Evan Pondel, phone call with author, November 10, 2017.

139
Evan Pondel, phone call with author, November 10, 2017.

36
Pondel affirms that fake news is not really that new, that people are just describing it
differently—Trump has changed the way people are defining it
140
. Noberto Aja, a managing
director of a New York-based IR firm shares similar sentiments with Pondel (See Appendix D:
Approved Statement for Use from Noberto Aja). “Over the past year or two, the term/concept of
fake news has gotten added attention largely on the back of its connection to the political
landscape, and it has not caught the attention of just about everyone, including the investment
community. In a way, the investment community has been dealing with fake news for a long
time, just different kinds of fake news.”
141

However, Aja has not seen fake news as a significant issue as it relates to IR, corporate
communications and communication on Wall Street
142
. “In the case of Wall Street, the biggest
problems related to fake news, aside from the biases and ulterior motives each of the various
constituents may have and how that influences their messaging, are both the sources and
resources that are often questionable and unevenly distributed,” Aja said
143
. An example Aja
gives is not everyone being able to afford a Bloomberg terminal, which offers timely, accurate
and expansive information
144
. “Thus, news aggregators that offer market information for free
often become the default source of information for many investors. And, the information these
sources offer is at times wrong/incomplete since there is little if any “vetting” process taking

140
Evan Pondel, phone call with author, November 10, 2017.

141
Noberto Aja, email message to author, January 9, 2018.

142
Noberto Aja, email message to author, January 9, 2018.

143
Noberto Aja, email message to author, January 9, 2018.

144
Noberto Aja, email message to author, January 9, 2018.

37
place.”
145
Aja states that anyone can call themselves an analyst or expert—anyone can put up a
fake bio or resume, fake their name and the photograph to post information behind false
identities
146
. “Whether the information is purposely put forth incorrectly or whether the source
simply does not know better, that’s another question, but unfortunately, the result is the same.”
147

Aja believes technology to have something to do with fake news—in both starting it and
stopping it
148
. “Fake news seems to come from places where there isn’t much regulation, such as
social media and social platforms, and happens mostly in forums, blogs and the conversation
section of articles.”
149
Aja refers to stock forums such as YahooFinance, where people can hide
behind anonymity and ask questions, make statements and answer other people’s questions in
biased/incorrect ways
150
.

In terms of company communication, Aja has seen a greater effort being put forth to offer
accurate information by publicly-traded companies
151
. “I think everyone can agree that the trend
in investor relations and corporate communications has been to be more open and offer more
disclosure to shareholders and the investment community at large. Most public companies
comply with SEC mandated filings, offer periodic and timely news disclosures, report detailed

145
Noberto Aja, email message to author, January 9, 2018.

146
Noberto Aja, email message to author, January 9, 2018.

147
Noberto Aja, email message to author, January 9, 2018.

148
Noberto Aja, email message to author, January 9, 2018.

149
Noberto Aja, email message to author, January 9, 2018.

150
Noberto Aja, email message to author, January 9, 2018.

151
Noberto Aja, email message to author, January 9, 2018.

38
quarterly results, hold conference calls where they often take questions from analysts and
investors, employ investor relations departments to handle timely communications with the
investment community, hold analyst/investor days, and often make senior management teams
regularly accessible.”
152

Both Pondel and Aja believe that fake news is not new, that politics has played a role in the
prominence of fake news—a sentiment that was expressed by journalists in the author’s media
content analysis. However, unlike Pondel, who has experienced the repercussions of fake
financial news firsthand, Aja has not personally seen fake news as a significant issue in relation
to IR, corporate communications or communication on Wall Street. Because of Pondel’s
personal experience with a fake news incident that directly impacted his client, Monster
Beverage, Pondel was able to comment on the best course of action to take when addressing a
fake news “attack”.

Earlier in this chapter, the author noted in the analysis of fake news’ effects on IR functions that
underlying issues and/or external factors could lead to the distribution of fake news—no intent to
mislead or exploit needed to exist. In the exchange between the author and Aja, Aja reinforced
this notion by articulating that sources and resources of news are questionable; it does not matter
if information was purposely put forward or the source doesn’t know better—the result is the
same
153
. Aja also stated that he had seen a greater effort being put forth by publicly-traded

152
Noberto Aja, email message to author, January 9, 2018.

153
Noberto Aja, email message to author, January 9, 2018.

39
companies to offer accurate information
154
. This greater effort observed by Aja could be the
reason why he has not seen fake news as a significant problem to IR or corporate
communications. Shareholders who have a strong relationship with the company they have
invested in are less likely to consider outsourced news or news sources, unless the information
has been acknowledged and/or published by the company itself—a notion that was considered by
the author earlier in this chapter. Another notion that is shared between Aja and the author’s
analysis of case studies is that technology plays a role in creation of fake news, that it comes
from a place, social media, where there is little regulation
155
.

Conclusion
Over two-thirds of American adults obtain some of their news through social media
156
. Further,
one study revealed that one-third of institutional investors reported that information they had
gathered on social media had influenced their investment decisions
157
. But interestingly, only
one-quarter of IR professionals use social media for work purposes, believing that there is a
“lack of interest in the medium by the investment community”
158
. This statistic is also closely
reflected on a global scale—only 30% of publicly-traded companies use social media for IR
purposes
159
. The discrepancy between the two parties could offer an explanation as to why fake

154
Noberto Aja, email message to author, January 9, 2018.

155
Noberto Aja, email message to author, January 9, 2018.

156
Leo Sun, “A Foolish Take: Pew says majority in U.S. get news from social media,” USA Today, October 28,
2017, https://www.usatoday.com/story/money/media/2017/10/28/a-foolish-take-a-majority-of-americans-get-news-
from-social-media/106719508.

157
“What’s the Role of Social Media in Investor Relations?” News, Equities.com, accessed December 21, 2017,
https://www.equities.com/news/what-s-the-role-of-social-media-in-investor-relations.

158
Equities.com, “What’s the Role of Social Media in Investor Relations?”

159
Equities.com, “What’s the Role of Social Media in Investor Relations?”

40
financial news does not rely as heavily on social media as it does on online news sources—IR
and PR industry professionals who do use social media utilize it for strategic communication
purposes rather than using it as a channel to inform what is trending and spreading. Therefore,
any other information skewing away from company messaging could be skepticized. It is also
important to note that investors are not using social media as their only resource to obtain
financial news—traditional media sources are being used alongside social media.

Fake news has the potential to impact IR functions on varying levels. The two functions that fake
news poses the most risk to is securities valuation and trading volume. Through an examination
and analysis of information in this chapter, it revealed that underlying issues and/or external
factors, such as unprofessionalism and poor stakeholder engagement, can also lead to the
distribution of fake news—no intent to mislead or exploit needs to exist. In light of this
important piece of information, the author has re-defined fake news, as it relates to IR. The
author now defines fake news as: News containing information that is partially or completely
fabricated. The removal of “purposely created and/or distributed with the intent to mislead and
exploit for financial gain” takes into consideration factors and/or issues that are out of the control
of IR professionals, which can contribute to the creation and spread of fake news.

Pondel and Aja have provided the thesis with professional insight into the role fake news plays,
and does not play, within the IR and communications industry. Both individuals recognized that
fake news is not new; politics has played a role in the prominence of fake news. However,
Pondel and Aja have differing experiences—Pondel has experienced the repercussions of fake
news firsthand, while Aja has not and does not see it posing a significant threat to

41
communications. Due to contrasting experiences, Pondel and Aja’s accounts do not
overwhelmingly support a position as to whether fake news is impacting communication
between publicly-traded companies and shareholders or not.

VI. Primary Research
Global Survey
To determine the effects fake news has on IR and financial communication practices on a larger
scale, the author conducted a global survey which was distributed to individuals who worked in
the IR and corporate communication fields. Participants were asked 27 questions—five
demographic, 12 body, and 10 breakout. Participants were presented with breakout questions if
their responses met certain criteria. The survey was distributed to in-house IR and PR, PR
agency and IR firm professionals. A total of 200 responses were recorded. One-hundred-and-
seventy participants answered all questions presented to them. Thirty participants provided
partial responses. To view detailed responses, refer to Appendix E for the full survey report.

Survey Sample
The survey sample consists of responses from eight regions of the world, with the majority of
respondents located in the United States of America (163). A total of three respondents did not
disclose their location. A total of five respondents did not disclose the U.S. state they reside in,
but stated they were located in the U.S. For more information on participating U.S. states, refer
to Appendix F.

42
Region of Residence Number of Participants
United States of America 163
Canada 8
South America 1
United Kingdom 9
Europe 2
South Africa 1
Asia-Pacific 11
Middle East 2
Unspecified 3
Total 200
Table 1: Participants’ Region of Residence

A total of 197 participants stated their years in practice within the industry. The participants of
this survey have high levels of experience. The most common experience levels were 11 to 20
years (59) and 20 or more years (68).

Figure 1: Experience Level of Participants

7
30
33
59
68
3
0
10
20
30
40
50
60
70
80
Less Than 1 Year 1 to 5 Years 6 to 10 Years 11 to 20 Years 20 or More Years Unspecified
Years in Practice
Experience Level
Experience Level of Particiapants
Total=197

43
Thirty-five occupations were listed by survey participants. The majority of respondents work in a
consultant (31), vice president (26) or director (22) role. Sixty-eight did not specify their role, but
indicated they worked in IR or PR roles. For a detailed list of participant occupations, refer to
Appendix G.

Survey participants were asked to select as many industries that applied to their current role. A
total of 382 industries were selected. The majority of respondents work within “Professional &
Business Services” (72) and/or “Banking & Finance” (64).

Industries Number of Participants
Accommodation & Food Services 7
Agriculture, Forestry, Fishing & Hunting 15
Arts, Entertainment & Recreation 4
Automotive & Transportation 12
Banking & Finance 64
Construction 12
Education 9
Healthcare & Social Services 28
Legal 4
Management & Enterprise 9
Manufacturing 31
Mining 17
Professional & Business Services 72
Real Estate 17
Repair & Maintenance 0
Retail Trade 11
Science 6
Sports & Athletics 0
Telecommunications 13
Technical Services 6
Utilities 7
Warehousing 1

44
Wholesale Trade 2
Other 35
Total 382
Table 2: Relevant Industries to Participants

Survey participants were asked to select the market capitalization of their employer. The most
common market capitalization range that was selected was “Less than $50 Million”.

Figure 2: Market Capitalization of Participants’ Employers

Survey Results
Awareness of fake news within the investing industry
Before it could be determined if fake news had impacted IR and financial communication
practices, IR and PR survey participants were asked if there were aware of fake news existing
within the investing industry. Over three-quarters of participants practicing IR and financial
3
5
27
28
55
82
0 10 20 30 40 50 60 70 80 90
Unspecified
More Than $200 Billion
$10 Billion to $200 Billion
$2 Billion to $10 Billion
$50 Million to $2 Billion
Less Than $50 Million
Number of Participants
Market Capitalization of Employers
Market Capitalization of Participants' Employers
Total=197

45
communications were aware of fake news’ existence within the investing industry (154). Just
under one-quarter of participants were not aware of its existence within the investing industry
(45).

Figure 3: Awareness of Fake News Within the Investing Industry

Outside of the U.S., awareness levels were about the same as within the U.S., with ~79% of
international respondents (27) stating they were aware of fake news within the investing
industry, and ~21% of international respondents (7) stating they were unaware of its existence.

Survey participants were asked how they knew about fake news if they answered they were
aware of fake news within the investing industry in the previous question. The most common
sources that bought about participants’ awareness of fake news was “The Media” (42) and
“Personal Observation” (28). In this context, the author defines “personal observation” as
viewing inaccurate or false news and knowing it to be fake. “Seeing stories in the media I know
True
77.39%
False
22.61%
I am aware of fake news' existence within the investing industry
Total=199

46
to be false,” and “Rumors of M&A activity that does not occur,” are responses from two survey
participants.

Other sources that bought about awareness include: Professional Experience (5); Word of Mouth
(8); The Internet (2); Blogs (3); Traditional Media (4); Digital Media (7); Social Media (6);
Politics (3); School Class (1); Being Made Aware of Rumors (10); Through Employer (2); and
Professional Associations (4). Under “Professional Experience”, one respondent wrote: “False
story about our company being acquired by a Chinese pharma company.” Another respondent
wrote: “One of my clients, a real estate investment company, found a fake story about their
business.” On the other hand, some respondents stated that it was part of their job to know fake
news existed (3), and many stated they knew fake news had always been around (18). Three
respondents were unsure of how they became aware of fake news.

To determine how closely politics was associated with respondents’ awareness of fake news,
survey participants were asked to agree or disagree with the following statement: I first became
aware of fake news through the 2016 U.S. presidential election. For 67 participants, their
awareness of fake news stemmed from politics. This was true for 14 international participants, as
well (~42% of respondents outside of U.S.). One-hundred-and-twenty-one respondents were
aware of fake news before the 2016 U.S. presidential election, as well as for 19 international
participants (~58% of respondents outside of U.S.)

47
Figure 4: Awareness of Fake News through the 2016 U.S. Presidential Election

Fake news’ impacts to investor relations or financial communication practices
To ascertain if IR and PR industry professionals believed that fake news had impacted the
reputation of IR and financial communications, survey participants were asked if fake news was
negatively impacting the IR or financial communications industry. On the Likert scale, the most
common response was “Somewhat Agree” (52), followed by “Neither Agree nor Disagree” (35),
“Disagree” (32) and closely by “Agree” (31).

True
35.64%
False
64.36%
I first became aware of fake news through the 2016 U.S. presedential
election
Total=188

48
Figure 5: Impacts of Fake News to the Investor Relations or Financial Communications Industry

To explore impressions about how much fake news may have impacted communication between
publicly-traded companies and shareholders, as well as the investing community, survey
participants were asked if fake news had impacted the way they conduct their work. Fifty-six
participants, the most out any other category, disagreed that fake news had impacted the way
they conduct their work. This was followed by the “Somewhat Agree” (39) response, then by the
“Neither Agree nor Disagree” response (28).

For the IR and PR industry professionals who agreed on some level that fake news had impacted
the way they conduct their work, some of the responses cited were: “I make sure that I double
check and document facts so they can be independently verified,” “Investors read the [fake]
news and call the company with questions—we are forced to respond, taking time away from
10
32
17
35
52
31
4
0 10 20 30 40 50 60
Strongly Disagree
Disagree
Somewhat Disagree
Neither Agree nor Disagree
Somewhat Agree
Agree
Strongly Agree
Number of Responses
Response
Fake news is negatively impacting the investor relations or financial
communications industry
Total=181

49
other productive activities and real issues,” “Part of my job is now helping to re-educate clients,
consumers and the general public as a result of fake news they have consumed,” “When a fake
news article appears that affects one of my clients, I have to go to work on a crisis basis,” and
“My clients can be negatively impacted by false stories about them, which requires constant
monitoring, careful preparation, and rapid response.”

Figure 6: Impacts of Fake News to Job Responsibilities

Outside the U.S., nearly half of international participants (~49% of 32) disagreed that fake news
had impacted the way they conduct their work. This was followed by “Neither Agree nor
Disagree” and “Somewhat Agree” (both ~19%, or 6 out of 32).

Survey participants who agreed on some level that fake news had impacted the way they
conducted their job tasks were asked to explain how fake news had impacted the way they
27
56
12
28
39
18
3
0 10 20 30 40 50 60
Strongly Disagree
Disagree
Somewhat Disagree
Neither Agree nor Disagree
Somewhat Agree
Agree
Strongly Agree
Number of Participants
Response
Fake news has impacted the way I conduct my work
Total=183

50
conduct their work. Of the 57 responses, an overwhelming response was the need to further
investigate and check sources and/or facts in written material (17). Other major themes discussed
were: Answering more investor inquiries (8); Addressing misconceptions (6); It is now harder to
determine people’s intentions (4); and More time spent media monitoring (4). To view all themes
discussed, refer to Appendix H.

Out of 178 responses, 74 respondents had not been impacted by fake news within the past year.
The survey was distributed and open between November 1, 2017 to December 24, 2017. This
dates one year as far back as November 2016. Fifty-five respondents were required to deal with
the impacts once or twice throughout the year. Twenty respondents had three to five instances of
fake news impacts, and 16 respondents had more than six instances. Thirteen respondents did not
know how many fake news impacts they had received.

Figure 7: Fake News Impacts in One Year
13
16
20
55
74
0 10 20 30 40 50 60 70 80
Unknown, Uncertain or Don't Know
More than Six Times
Three to Five Times
Once or Twice
Zero
Number of Responses
Response
In the past year, how many times have you directly dealt with the
impacts of fake news?
Total=178

51
Survey participants who selected that they had been impacted by fake news within the past year
were presented with a question about the need to file documents with the SEC due to fake news
impacts. Out of the 90 responses, only three participants were required to submit documentation
to the SEC.

Comparison of the fake news concern to other investor relations or financial
communication practice concerns
To see how fake news compared to other industry concerns, survey participants were asked to
rank a list of industry concerns, with “one” being the most pressing concern and “nine” being the
least pressing concern. Of the nine options listed, the top concern among respondents was
“Industry Performance” (~31% of respondents). The second highest concern was the “U.S.
Economy” (~24% of respondents). The third highest concern among respondents was the
“Global Economy” (~24% of respondents). The fourth highest concern was “Other” (~15% of
respondents). “Fake News” ranked seventh overall and tied with “Corporate Social
Responsibility”. To see the full rankings table, refer to Appendix I.

Concern 1 # 2 # 3 # 4 # Total
Fake News 6.51% 11 5.92% 10 6.51% 11 9.47% 16 169
Cryptocurrency 9.47% 16 5.33% 9 4.14% 7 5.92% 10 169
Political Influences 10.65% 18 8.28% 14 15.38% 26 14.79% 25 169
Social Influences 5.92% 10 7.69% 13 15.38% 26 12.43% 21 169
U.S. Economy 24.26% 41 20.12% 34 11.83% 20 7.10% 12 169
Global Economy 17.16% 29 17.75% 30 23.67% 40 5.33% 9 169
Industry Performance 30.77% 52 20.12% 34 10.65% 18 5.92% 10 169
Corporate Social
Responsibility
6.51% 11 5.92% 10 11.83% 20 11.24% 19 169
Other 14.71% 25 1.76% 3 2.35% 4 5.88% 10 170
Table 3: Top-Ranked Concerns About the Future of the Investor Relations or Financial Communications Industry

52
Survey participants were given the opportunity to expand on their “Other” concern/s option.
Eight themes were exhibited in these responses—News & Information (33); Technology (26);
Regulations (45); Investing Industry Trends (43); Profession (22); Activities within Publicly-
Traded Companies (18); and Political, Social, Cultural & Ethical (13). Thirty-four survey
participants had no other concerns. The top “Other” concerns were within the “Regulations” and
“Investing Industry Trends” categories. “Markets in Financial Instruments Directive 2” (MiFID
II) was mentioned 22 times and “Passive Investing” was mentioned 19 times. To see the
complete list of “Other” concerns, refer to Appendix J.

Responsibility for the spread of fake news within the investing industry
To determine who IR and PR industry professionals thought were responsible for spread of fake
news, survey participants were asked who they thought was responsible for the distribution of
fake news. Survey participants were asked to select as many influences as they thought applied.
“Social Media Users” was the most selected factor (118), followed by “Scammers” (113), then
“Media Outlets” (86).

53
Figure 8: Responsibility for the Spread of Fake News

Survey participants were given the opportunity to expand on the “Other” option, if selected.
Other mentions for who is responsible for the spread of fake news within the investing industry
include: Investors (1); Investment Bankers (1); Hedge Funds (5); Social Media Platforms (1),
Competitors (1); Financial Writers/Promoters/Influencers (1); Bloggers (1); Politicians (1);
Prosecutors (1); Some Regulators (1); Newsletters (1); Non-Government Organizations (NGOs)
(1); Shareholder Activists (1); Uneducated Journalists (1); Message Boards (1); Unethical
Company Practices (1); Everyone by Word of Mouth (1); Short Sellers (4); The Publicly-Traded
Company Itself (1); Company Management (1); Individuals Who Share Information Without
Vetting Sources (1); Website/Blog Operators (1); and Environmental Groups (1).

38
113
28
86
3
53
27
118
0 20 40 60 80 100 120 140
Other
"Scammers"
Public Relations / Communication Firms
Media Outlets
The Securities & Exchange Commission
Investors
Sell-Side Analysts
Social Media Users
Number of Responses
Response
Who is responsible for the spread of fake news within the investing
industry?
Total=466

54
Satisfaction with the Securities and Exchange Commission’s efforts in combating fake news
To ascertain the satisfaction levels among IR and PR industry professionals with the SEC in
combating fake news, survey participants were asked to select a satisfaction level. A large
majority of survey participants stated they were “Neither Satisfied nor Dissatisfied” with the
SEC’s efforts in combating fake news (109). This is approximately 64% of survey participants.

Answer Number of Responses
Extremely Dissatisfied 9
Moderately Dissatisfied 7
Slightly Dissatisfied 10
Neither Satisfied nor
Dissatisfied
109
Slightly Satisfied 11
Moderately Satisfied 17
Extremely Satisfied 6
Total 169
Table 4: Satisfaction with the SEC’s Efforts in Combating Fake News

Survey participants who were dissatisfied on some level with the SEC’s efforts in combating
fake news were asked to specify why they were dissatisfied. Respondents’ reasons were grouped
into categories based on the theme of their response. The main themes addressed were: The
SEC’s inability to identify anonymous sources (2); The SEC are not addressing the issue (6);
There is limited regulation surrounding market manipulation (2); The SEC are not holding
individuals/companies accountable (7); There is a lack of conviction in addressing the fake news
problem (2); The SEC have not addressed security concerns surrounding hacking (1); There is a
lack of action in combating fake news (4); There is a lack of regulations surrounding short
selling (3); Not applying existing regulations to relevant situations (1); and The lack of
investigations surrounding stock movement (1).

55
Responses from IR and PR industry professionals about their dissatisfaction with the SEC’s
efforts include: “Prosecution of those engaging in market manipulation is way too limited,” “I
don’t see them doing anything—not even sure if it’s on their radar,” “They do not have the
ability to investigate adequately and when they do, it is almost impossible to track down a
blogger and have any enforcement action,” “Focus appears to be on implementation of
regulations rather than monitoring the markets and protecting individual investors,” “Generally,
the SEC is not responding quick enough to make a difference; the damage is done,” “It’s too
easy to do and there are no consequences,” “Not applying existing regulations to obvious
situations,” and “The SEC needs more enforcement resources dedicated to fighting those that
promote fake news.”

Fake news’ prevalence within the next five years
To ascertain if IR and PR industry professionals thought fake news would become a larger issue
in the future, survey participants were asked if they thought fake news will be a bigger problem
within the next five years. One-hundred-and-two survey participants believed this to be true.
Fifty-one participants stated, “Neither True nor False”. Fifteen participants do not believe fake
news will be a bigger problem within the next five years.

56

Figure 9: Fake News’ Prevalence Within the Next Five Years

Outside of the U.S., ~67% of international participants (20) believed that fake news will be a
bigger problem within the next five years, compared to ~23% (7) who neither agreed or
disagreed, and 10% (3) who disagreed entirely.

The new face of pump-and-dump schemes
A sentiment that was expressed throughout secondary research was that fake news was the new
form of pump-and-dump. In one instance, an article published by The Washington Post, a source
was quoted saying, “[Fake news] is a modern take on the old pump-and-dump schemes.”
Participants were asked if they agreed or disagreed with this popular statement. Over 50% of
respondents agreed with the statement (86), over 40% of respondents believed it was neither true
nor false (70), and over seven percent of respondents believed it to be false (12).
True
60.71%
False
8.93%
Neither True nor
False
30.36%
Fake news will be a bigger problem within the next five years
Total=168

57

Figure 10: The Modern Take on Pump-and-Dump Schemes

Responsibility to combat fake news within the investing industry
To determine who IR and PR industry professionals thought were responsible for combating fake
news, survey participants were asked who they thought was responsible for preventing the
distribution of fake news. Survey participants were asked to select as many influences that they
thought applied. “The Securities and Exchange Commission” (125) was the most popular
response, followed by “Media Outlets” (121) and “Social Media Companies” (90). Investors,
sell-side analysts and public relations/ communication firms received a similar number of
responses, in the high 80s. Thirty-one respondents selected “Other”.

True
51.19%
False
7.14%
Neither True nor
False
41.67%
Is fake news the modern take on "pump-and-dump" schemes?
Total=168

58
Figure 11: Responsibility to Combat Fake News

Participants who selected “Other” were given the opportunity to state who else they thought was
responsible in combating fake news. Other individuals or entities who were considered
responsible for combating fake news include: Wire services (1); Owners of blogs and chatrooms
(1); Outside investors of the publicly-traded company (1); All stakeholders (2); Publicly-traded
companies themselves (13); Corporate management (1); Investment bankers (1); Issuers of
securities (2); Readers of fake news (1); IR professionals (1) Everyone (2); Publicly-traded
company’s IR/PR department (1); Sources of information (1); Companies that have had fake
news written about them (1); and The public (1).

31
121
66
90
125
86
88
87
0 20 40 60 80 100 120 140
Other
Media Outlets
The U.S. Government
Social Media Companies
The Securities & Exchange Commission
Investors
Sell-Side Analysts
Public Relations / Communication Firms
Number of Responses
Response
Whose responsibility is it to combat fake news within the investing
industry?
Total=694

59
The best way to address the issue of fake news within the investing industry
To determine the best solution to combat fake news, IR and PR industry professionals were
asked what the best method was in their professional opinion. Survey participants’ answers were
grouped into categories based on the theme of their response. The methods that respondents
thought were the best ways to combat fake news within the investing industry were: Holding
people accountable who spread fake news (15); Better news monitoring (4); Companies self-
policing (3); Providing greater accessibility to facts and sources (2); Improved technology to
combat fake news, such as use of algorithms and analytics (2); Provide better resources to
communicate or verify news with (6); Provide greater disclosure of news information sources
(8); Intervention by calling out publishers and/or authors of fake news (18); Improving
regulations surrounding communicating news information (11); Critical thinking by individuals
before making judgements or investment decisions (14); Constant vigilance (7); Stronger
oversight by governing bodies and institutions (10); Providing better education to the investment
community about fake news (17); Ignoring fake news or not being reactionary to it (4); Better
compliance with regulations (8); Improved engagement with stakeholders (14); Stronger
implementation of penalties for authors of fake news (21); Encouraging further transparency of
information and data from the investment community (22); Prosecuting those who create fake
news (5); and Investigation of fake news sources (2). Eleven participants were unsure how to
effectively combat fake news.

Some of the suggestions recommended by IR and PR industry professionals in combating fake
news were: “Having a high-quality webpage, so that we can give timely our comments on any
fake news,” “Have an action plan in place to address various scenarios,” “Require media and

60
social media portals that are channels for fake news to have an effective means by which
companies can readily and quickly contact them to correct or delete news that has been posted,”
“Educate people on how to spot it and on what's a reliable source and what's not,” “Tougher
enforcement by the SEC and other governing bodies on both a state and federal level,”
“Consistent pro-active engagement with shareholders and other market participants,” “Stick to
the company's message to the financial markets and do not let fake news distract the company's
efforts to communicate its goals,” “Heavy fines or jail sentences, as we have in the UK,”
“Aggressively distributing facts to re-educate various constituencies,” “I'd like to see some form
of verification system, like Twitter does, with company statements. Also, highlighting
organizations that spread fake news,” “It has to be a multi-facet approach—the SEC, buy-side
and sell-side, IR firms, management teams—everyone needs to work together,” and “Use of
algorithms.”

61

Figure 12: The Best Method to Combat Fake News

11
15
4
3
2
2
6
8
18
21
5
2
10
11
22
14
8
7
14
17
4
0 5 10 15 20 25
Unsure
Accountability
Better Monitoring
Self-Policing
Greater Accessibility
Technology
Better Resources
Greater Disclosure
Intervention
Penalties
Prosecution
Investigation
Stronger Oversight
Improved Regulations
Further Transparency
Critical Thinking
Better Compliance with Regulations
Vigilance
Improved Engagement
Better Education
Ignore It
Number of Responses
Themes
What is the best way to combat fake news within the investing
industry?
Total=167

62
VII. Analysis of Research Findings
Characteristics of the Typical Survey Participant
Demographic responses collected suggests that the typical respondent is from the U.S. working
in an IR, consultant, vice president or director role with more than 11 years’ experience
practicing investor relations or financial communications and an employer with a market
capitalization of less than $50 million. The typical respondent would have most likely worked in
banking and finance and/or professional and business services. With 64% of survey participants
having more than 11 years of experience working in the IR or financial communications fields,
the survey sample consists of highly experienced professionals.

Research Findings
There is a high awareness level of fake news that exists within the investing industry, with ~77%
of IR and PR industry professionals acknowledging its existence and ~87% of IR and PR
industry professionals agreeing on some level that fake news is negatively impacting the IR or
financial communications industry. There is also a high awareness level of fake news within the
investing industry outside of the U.S., with just under 80% of 34 international IR and PR
industry professionals acknowledging its existence. Even though awareness of fake news within
the investing industry is over three-quarters, the author was expecting awareness levels to be
higher. This is for two reasons. Firstly, case studies cited in news reports that were examined in
the media content analysis contained several high profile publicly-traded companies, such as
Google, McDonalds and Chipotle. Secondly, the majority of survey respondents had over 11
years’ experience in the industry. It should, however, be taken into consideration that the lower-

63
than-expected awareness level could be the result of survey participants’ different interpretations
of what fake news is, since there is a lack of a standard definition as it relates to IR.
When cross-comparing fake news awareness with survey participants’ years of practice,
awareness of fake news was high—between 72% to 86% across all year ranges. This indicates
that exposure to fake news was not dependent on the number of years survey participants had
spent in the IR and/or PR industry.

I am aware of fake news'
existence within the investing
industry.

TRUE FALSE Total
How many years
have you been in
practice in your
current industry?
Less than 1
year
6 1 7
85.71% 14.29% 100%
1 to 5 years
24 6 30
80% 20% 100%
6 to 10 years
24 9 33
72.73% 27.27% 100%
11 to 20 years
48 11 59
81.36% 18.64% 100%
20 or more
years
50 18 68
73.53% 26.47% 100%
Total
152 45 197
77.16% 22.84% 100%
Table 5: The Cross-Section Between Awareness of Fake News Within the Investing Industry and Years in Practice

Even though the majority of survey respondents worked within “Banking & Finance” and
“Professional & Business Services”, those industries did not have the highest awareness levels of
fake news. Industries with the highest levels of awareness of fake news (over 80%) are:
Agriculture, Forestry, Fishing & Hunting; Management & Enterprise; Retail Trade; Science;
Technical Services; Utilities; and Wholesale Trade.

64

I am aware of fake news'
existence within the investing
industry.

TRUE FALSE Total
Please select the relevant
industry/industries you
currently work in.
Accommodation & Food
Services
5 2 7
71.43% 28.57% 100%
Agriculture, Forestry,
Fishing & Hunting
14 1 15
93.33% 6.67% 100%
Arts, Entertainment &
Recreation
4 1 5
80% 20% 100%
Automotive &
Transportation
10 3 13
76.92% 23.08% 100%
Banking & Finance
52 13 65
80% 20% 100%
Construction
9 4 13
69.23% 30.77% 100%
Education
7 2 9
77.78% 22.22% 100%
Healthcare & Social
Services
20 8 28
71.43% 28.57% 100%
Legal
3 1 4
75% 25% 100%
Management &
Enterprise
9 0 9
100% 0% 100%
Manufacturing
23 8 31
74.19% 25.81% 100%
Mining
12 5 17
70.59% 29.41% 100%
Professional & Business
Services
55 17 72
76.39% 23.61% 100%
Real Estate
13 4 17
76.47% 23.53% 100%
Repair & Maintenance
0 0 0
0% 0% 100%
Retail Trade
11 0 11
100% 0% 100%
Science
6 0 6
100% 0% 100%

65
Sports & Athletics
0 0 0
0% 0% 100%
Telecommunications
9 4 13
69.23% 30.77% 100%
Technical Services
5 1 6
83.33% 16.67% 100%
Utilities
6 1 7
85.71% 14.29% 100%
Warehousing
0 1 1
0% 100% 100%
Wholesale Trade
2 0 2
100% 0% 100%
Other
28 7 35
80% 20% 100%
Total
153 45 198
77.27% 22.73% 100%
Table 6: The Cross-Section Between the Awareness of Fake News Within the Investing Industry and
Participant Industries

Approximately 64% of IR and PR industry professionals knew of fake news before its role in the
2016 U.S. presidential election. Again, this is surprising considering that most respondents have
over a decade’s worth of experience within IR and corporate communication fields. Of the 64%
(121), approximately 24% became aware of fake news through its role in U.S. politics. While
this is not an overwhelming amount, it reinforces secondary research findings that politics is
closely tied with fake news. Interestingly, just over 40% of 33 international participants became
aware of fake news through its role in the 2016 U.S. presidential election. This could be due to
fake news having little impact to their job function, or the difference in media landscapes
compared to the U.S.

Articles analyzed in the media content analysis, except one, were published in the first half of
2017. With the 2016 U.S. presidential election taking place on November 11, 2017, it is highly

66
plausible that these articles were riding off the momentum of fake news’ role in the election. Of
the articles analyzed, the majority were published in April 2017. This happens to coincide with
President Trump’s first 100 days in office.

The most common sources that bought about awareness of fake news was the media, personally
observing fake news and knowing it to be fake, and having knowledge that is has always existed
within the industry. Here, the author observed an interesting correlation between the awareness
of fake news made through the media and the lower-than-expected general awareness of fake
news among IR and PR industry professionals. Considering that approximately one-third of IR
and PR industry professionals found out about fake news through the media, and that a
responsibility of IR and PR practitioners is to closely monitor traditional and social media, the
author was surprised that the media did not contribute to higher awareness levels of fake news.

Approximately one-fifth of survey respondents were not aware of fake news existing within the
investing industry. It could be that fake news is not on the radar of all IR and PR industry
professionals. This may be linked with the company’s market capitalization. Secondary research
data indicated that micro- and small-cap companies are more likely to be targeted by fake
news
160
. IR and PR industry professionals working in or with companies with a market
capitalization of less than $50 million may be more aware of this fact. This notion is also
supported by primary research data. The largest market capitalization range, more than $200
billion, was the only range where awareness of fake news within the investing industry was

160
John C. Coffee, Jr., “Cheating the Algorithm: The New “Pump and Dump” Fraud”, The CLS Blue Sky Blog,
accessed December 20, 2017, http://clsbluesky.law.columbia.edu/2017/07/24/cheating-the-algorithm-the-new-
pump-and-dump-fraud.

67
lower than those who were unaware of fake news in the industry. However, the discrepancy is
not large, and could be due to the small number of respondents from employers with a market
capitalization of over $200 billion.

What is the total market capitalization of the company you
currently work for?

Less
than $50
million
$50
million
to $2
billion
$2
billion
to $10
billion
$10
billion to
$200
billion
More
than
$200
billion
Total
I am aware of
fake news'
existence within
the investing
industry.
TRUE 67 42 24 17 2 152
FALSE 15 13 4 10 3 45
Total 82 55 28 27 5 197
Table 7: The Cross-Section Between Employer Market Capitalization and Awareness of Fake News Within the Investing
Industry

Just over 50% of IR and PR industry professionals stated that their job tasks had not been
impacted by fake news, while just over 30% of professionals stated their jobs had. Survey
participants outside the U.S. largely disagreed that fake news had impacted their job tasks—
approximately 49% of 32 international IR and PR industry professionals. No other research data
collected by the author can provide further insight into this statistic. For future studies, the author
suggests observing patterns between in-house IR and PR professionals’ experience with fake
news to the fake news experience of those who work in an agency setting to gain further insight
into impact patterns.

A pattern observed by the author was that the higher the market capitalization range of
respondents’ employers, the lower the impact that fake news had on the job tasks of IR and PR
professionals. Again, this is supported by secondary research data that micro- and small-cap

68
companies are more prone to fake news “attacks”
161
. However, this could also be due to a higher
level of participation among small- to mid-market capitalization employees.

What is the total market capitalization of the company you
currently work for?

Less
than
$50
million
$50
million
to $2
billion
$2
billion
to $10
billion
$10
billion to
$200
billion
More
than
$200
billion
Total
Fake news
has impacted
the way I
conduct my
work.
Strongly
Disagree
11 7 4 4 1
27
40.74% 25.93% 14.81% 14.81% 3.70% 100%
Disagree
21 15 9 10 1
56
37.50% 26.79% 16.07% 17.86% 1.79%
100%
Somewhat
Disagree
5 3 1 3 0
12
41.67% 25% 8.33% 25% 0%
100%
Neither
Agree nor
Disagree
13 7 6 1 1
28
46.43% 25% 21.43% 3.57% 3.57% 100%
Somewhat
Agree
14 11 6 5 2
38
36.84% 28.95% 15.79% 13.16% 5.26% 100%
Agree
10 6 1 0 0
17
58.82% 35.29% 5.88% 0% 0%
100%
Strongly
Agree
2 0 0 0 0
2
100% 0% 0% 0% 0% 100%
Total
76 49 27 23 5
180
42.22% 27.22% 15% 12.78% 2.78% 100%
Table 8: The Cross-Section Between Employer Market Capitalization and Impacts of Fake News on Job
Tasks

Even though ~51% of IR and PR industry professionals had no changes to their job tasks, ~58%
had directly dealt with the impacts of fake news at least once during the past year. Although a
large portion of IR and PR industry professionals did not need to change the way they conducted

161
John C. Coffee, Jr., “Cheating the Algorithm: The New “Pump and Dump” Fraud”, The CLS Blue Sky Blog,
accessed December 20, 2017, http://clsbluesky.law.columbia.edu/2017/07/24/cheating-the-algorithm-the-new-
pump-and-dump-fraud.

69
their tasks and responsibilities because of fake news, those who had been directly impacted by
fake news, it appears, made necessary changes to their job responsibilities. Only nine percent
(approximate) of those directly impacted by fake news indicated that fake news had not changed
the way they conducted their work. It was also observed that the industry with the highest
amount of fake news impacts within the past year was the healthcare and social services industry,
with the “Six or More Times” option selected nine times. While there were healthcare
(pharmaceutical) companies affected by fake news in the secondary research, it was not the
industry/sector with the highest number of case studies cited in media reports—it was
technology. This further strengthens the argument that fake news does not target a specific
industry or sector.

For those who expressed that their job tasks and responsibilities had been impacted by fake
news, the most common change to job tasks was further investigation and checking of sources
and/or facts. The two highest responses to fake news changing the way IR and PR industry
professionals conducted their work, “Disagree” and “Somewhat Agree”, is an indication that
while fake news may not be a problem to some, it does exist on a certain level to others. Of the
professionals who dealt with the impacts of fake news, only three IR and PR industry
professionals were required to file documents with the SEC. This signifies that the repercussions
felt by fake news “attacks” is not a big enough issue to be taken to the regulatory body.

Compared to other future concerns about the IR or financial communications industry held by IR
and PR industry professionals, fake news is not a big concern, ranking seventh out of nine
concerns. The top three concerns of professionals, in order, are industry performance, the U.S.

70
economy and the global economy. Other prevalent concerns include MiFID II and passive
investing. These other concerns also outweighed the concern of fake news. Even though fake
news ranks low on the scale of other concerns, it should not be assumed that fake news is not
viewed as a growing concern. The concerns that ranked ahead of fake news have the potential to
have greater impact on share price as well as longer lasting; the effects of fake news will
generally only be felt for a short period of time. For example, the 2008 Great Recession in the
U.S. saw stocks being traded extremely low for an extended period of time. Compare this to fake
news, where trading can be halted once fake news has been identified, and the impact can be
contained.

Approximately 61% of IR and PR industry professionals believe fake news will become a bigger
problem within the next five years, strengthening the notion that fake news’ low ranking does not
mean it is not a pressing issue. This presents a point of concern. IR and PR industry professionals
indicated that compared to other concerns, fake news is not an issue, but believe it will become a
bigger problem within the next five years. Paired with the fact that fake news has not prompted
IR and PR industry professionals to change the way they conduct their work, this highlights a
lack of urgency to address the issue. The combination of these three responses indicates that IR
and PR industry professional are ill-prepared to combat fake news within the investing industry.

Approximately 51% of IR and PR industry professionals see fake news as the new version of the
pump-and-dump scheme. This correlates with Columbia Law School’s Professor Berele’s view

71
that fake news is the new form of pump-and-dump schemes
162
. Another view that Professor
Berele expressed is that fraud mutates and morphs into new configurations in response to new
opportunities, and today, the new configuration is social media
163
. This could explain why IR
and PR industry professionals identified social media users as the most responsible for spreading
fake news within the investing industry. It could also be in recognition of social media’s
unregulated state. Either way, the concern is not unwarranted—the Greenwich Associates report
from 2015 indicated that nearly 80% of institutional investors rely on social media, along with
traditional media, to make investment decisions
164
. It should be noted, however, that while social
media has made it easier to commit securities fraud involving fake news, scammers rely more
heavily on older digital media systems, in this case, online news sites, to commit securities fraud.
The website Seeking Alpha received a high number of mentions among survey respondents, in
comparison to other sources of fakes news cited, for contributing to the invention and
distribution of fake news. This is most likely due to its lack of vetting because of the site’s
crowd-sourcing nature.

Interestingly, who journalists and IR and PR industry professionals attributed to the spreading of
fake news was not directed towards the same individuals or entities. The media content analysis
revealed that the journalists who wrote about fake news within the investing industry placed
blame on the writers who were paid to write bullish articles. However, IR and PR industry

162
John C. Coffee, Jr., “Cheating the Algorithm: The New “Pump and Dump” Fraud”, The CLS Blue Sky Blog,
accessed December 20, 2017, http://clsbluesky.law.columbia.edu/2017/07/24/cheating-the-algorithm-the-new-
pump-and-dump-fraud.

163
Coffee, Jr., “Cheating the Algorithm: The New “Pump and Dump” Fraud.”

164
“What’s the Role of Social Media in Investor Relations?” News, Equities.com, accessed December 21, 2017,
https://www.equities.com/news/what-s-the-role-of-social-media-in-investor-relations.

72
professional survey participants directed the blame towards social media users. IR and PR
industry professionals also identified short-sellers as responsible for the spread of fake news.
Secondary research data supports this stance. A short-seller was identified in the “Form 1 of
Fake News” case study (Audience, Inc. and Sarepta Therapeutics), as well as Pondel’s
experience with fake news
165
. What is noteworthy is that of the three forms of fake news
uncovered by the author, a large portion of survey respondents referred to form one of fake news,
while media reports predominantly reported on form two of fake news.

Approximately 65% of IR and PR industry professionals were neither satisfied or dissatisfied
with the SEC’s efforts in combating fake news. For the ~15% who felt dissatisfaction on some
level, they believed the SEC were not holding fake news authors and/or distributors accountable
for their actions, or that the SEC were not doing enough to address the fake news issue.
Interestingly, ~78% of those who did not believe that fake news was negatively impacting the IR
and/or financial communications industry also felt impartial towards the SEC’s efforts in
combating fake news. When it came to identifying who was responsible for combating fake
news, there was no overwhelming answer; there was no one group or entity that IR and PR
industry professionals believed were responsible for combating fake news. It may be that a
combined group effort is needed by professionals active within the investing industry to combat
fake news.

165
“Scottish Citizen Indicated for Twitter-Based Stock Manipulation Scheme,” FBI, accessed December 20, 2017,
https://www.fbi.gov/contact-us/field-offices/sanfrancisco/news/press-releases/scottish-citizen-indicted-for-twitter-
based-stock-manipulation-scheme; Evan Pondel, phone call with author, November 10, 2017.

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There was no prevailing response when it came to the best way to address fake news, either.
However, intervention was one of the higher responses. The author refers to intervention as
addressing fake news publicly when it is published. This response goes against Pondel’s
suggestion to not respond unless it is driving the stock price down
166
. While over 50% of IR and
PR industry professionals have been directly impacted by fake news, what cannot be determined
is the percentage, who stated intervention was the best method, who have experienced and
navigated through a fake news “attacks”, like Pondel has. This possible discrepancy makes it
hard to determine how plausible the intervention response is.

While not overwhelming, an important occurrence that unfolded a number of times during the
primary research phase was survey participants inquiring about what the definition of “fake
news” was. Examples of what survey participants referred to as “fake news” were market
rumors, half-truths, or completely fabricated information. This goes against Merriam-Webster’s
stance that the “fake news” term is a self-explanatory
167
. The author estimates approximately five
percent of survey participants inquired about the definition of “fake news”, or the need for a
definition. This was brought to the author’s attention through completed survey responses and by
email correspondence. This incident, although minor, reinforces the fact that not all IR and PR
industry professionals possess the same “fake news” definition, or even have it defined
themselves.

166
Evan Pondel, phone call with author, November 10, 2017.

167
The Real Story of ‘Fake News’,” Merriam-Webster, accessed December 19, 2017, https://www.merriam-
webster.com/words-at-play/the-real-story-of-fake-news.

74
VIII. Conclusion
While fake news currently has had little impact to the practice of IR and financial
communications, there is a disconnect among IR and PR industry professionals. The majority of
IR and PR industry professionals agree the fake news problem will grow in the coming years.
However, there is no urgency to take action about it or prepare for the future. Even though IR
and PR industry professionals do not currently see fake news as a pressing issue in comparison to
other concerns such as industry performance, the U.S. economy and global economy, most
professionals do believe that fake news is negatively impacting the IR and/or financial
communications industry on some level.

Communication between publicly-traded companies and shareholders has had no drastic changes
and, therefore, there has been no extreme changes to job tasks and responsibilities of IR and PR
industry professionals. Rather, fake news has just increased the time spent on typical IR and PR
tasks current tasks, such as media monitoring and double-checking facts and/or sources. This is a
point of concern. The thesis has demonstrated how easily digital media systems (in this case,
social media and online news sites) can be hacked and/or manipulated, and as a result, alter share
prices. Yet, more than half of IR and PR industry professionals have not changed the way they
conduct their work or prepared to combat this.

The majority of IR and PR industry professionals acknowledged that fake news exists within the
investing industry—the awareness rate was over 75%. What was interesting was that
approximately 36% of IR and PR industry professionals only became aware of fake news
through its role in the 2016 U.S. presidential election. This is somewhat surprising considering

75
that most survey respondents had over a decade’s worth of experience within IR and corporate
communication fields and that an important undertaking of IR and PR professionals is to monitor
what is being said in the news.

The fake news problem exists as the new form of the pump-and-dump scheme and it does not
appear to target specific industries or sectors. Of the four IR functions—securities valuation,
trading volume, analyst coverage, and relationship with the investment community—the author
believes securities valuation and trading volume to be most at risk of being affected by fake news
due to the heavy reliance on news information to produce outputs.

Through secondary research analysis, the author was able to identify three forms of fake news—
individual commentary, paid stock promotions and fake official documentation. These forms
were observed by the author of the thesis and were not explicitly stated in the information
analyzed. Considering that the media predominantly reported on form two of fake news (paid
stock promotions), and IR and PR industry professionals mainly referred to form one of fake
news (individual commentary), this signifies that news outlets are not portraying a completely
accurate representation of IR and PR industry professionals’ views. However, this does not mean
that this is not an accurate representation of the view other professionals working within the
investing industry hold. IR and PR industry professionals may hold different opinions about the
fake news issue compared to other professionals working within the investing industry.

There was agreement among primary and secondary research sources that technology and social
media has made it easier to create and distribute fake news. One survey participant outlined this

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problem, stating: “In my opinion, the internet age has perpetuated the [fake news] problem.
When writing investment opinions on my clients, people who write for financial blogs (like
Seeking Alpha), have gotten facts wrong or have written things that were not true about the
company without reaching out to out to us first. In some cases, we were able to get corrections
written. In others, we were unable to do so. Our shareholders typically hear these rumors first, so
they are the first to let us know when something false is written about the company. In certain
cases, other public companies seeking an edge in a contract negotiation with our client or our
client’s peer, for example, would plant a false narrative with a journalist. When that has
happened, it has caused the sector to trade down.” However, it is important to note that while
social media has made it easier for to distribute fake news, spreading fake news through old
digital means, such as online news sites, is still the predominant method of distribution.

The lack of a “fake news” definition coming from a governing body or industry-leading
organization within the investing industry was an issue. The author first became aware of the
problem through secondary research. The problem became more evident through the process of
conducting and collecting primary research data. The lack of a clear definition meant there was
no consistency in secondary research, or among IR and PR industry professionals, of what fake
news actually entails. This most likely affected the accuracy of the data collected and analyses
presented in the thesis. The author attempted to provide a “fake news” definition as it related to
IR based on secondary research findings. However, through further examination of data, the
author was required to redefine the initial definition. The act of redefining “fake news”
demonstrates the complications of defining a term that has many complexities attached to it.

77
Secondary research also revealed that there have been large increases of news reports to do with
“fake news” and “investing” over the past two years. From 2015 to 2016, there was a ~76%
increase in media reports. From 2016 to 2017, there was an increase of ~153%. That equates to a
~346% total increase over the two-year period. This supports the notion that fake news is
becoming a growing problem. This surge coincided with the events surrounding fake news’ role
in politics. Specifically, the 2016 U.S. presidential election. The author attempted to steer clear
of any political references tied with fake news. However, it became apparent that fake news has a
strong association with politics, well before the 2016 U.S. presidential election.

An even bigger problem than IR and PR industry professionals not preparing for their predicted
growth of fake news was the lack of agreement on how to combat it. Even though there was no
majority solution, the most prevalent answer from IR and PR industry professionals was
intervention—by calling out it and making the public aware of it. However, this is contrary to
what Pondel recommended to the author—to intervene only when absolutely necessary and that
generally it is best to ignore fake news reports
168
. The author agrees with Pondel’s approach
since it is unclear how many of the IR and PR industry professionals have experienced and
navigated through a fake news “attack”.

There was little uniformity between who was to blame for the spread of fake news within the
investing industry among media reports and IR and PR industry professionals. Data collected
from survey participants indicated IR and PR industry professionals saw it as the role of entities
in leading the combat of fake news, rather than individuals.

168
Evan Pondel, phone call with author, November 10, 2017.

78
Internationally, action is being taken to better understand fake news and its effects, with the
United Kingdom and Australia initiating government inquiries into the matter
169
. In the U.S., no
government actions or plans to address fake news have been made public.

IX. Industry Recommendations
Based on the results and analysis of the thesis, the author proposes the following industry
recommendations:
1. Define “Fake News”
A definition of “fake news” as it relates to IR and what it encompasses is required before
it can be addressed. Based on secondary research, the author initially defined “fake news”
as: News containing information that is partially or completely fabricated, purposely
created and/or distributed with the intent to mislead prospective investors and exploit
invested shareholders, for financial gain. However, based on further research of fake
news, the author redefined fake news as: News containing information that is partially or
completely fabricated. The author feels a definition needs to be created by a governing
body or industry-leading organization, such as the SEC, NIRI or the U.S. government,
rather than individuals or entities with little authority, for it to hold credibility. As the
author mentioned earlier, clarification is needed surrounding the following:
i) Is “fake news” news that is complete and total fabrication?

169
“‘Fake news’ inquiry launched,” UK Parliament Website, accessed December 19, 2017,
http://www.parliament.uk/business/committees/committees-a-z/commons-select/culture-media-and-sport-
committee/news-parliament-2015/fake-news-launch-16-17/; “Terms of Reference,” Future of Public Interest
Journalism, Parliament of Australia, Accessed December 20, 2017, https://www.aph.gov.au/Parliamentary_
Business/Committees/Senate/Future_of_Public_Interest_Journalism/PublicInterestJournalism/Terms_of_Reference.

79
ii) Is news that contains inaccurate reporting or poor sourcing/research
considered “fake news”?
iii) Should sensationalism or exaggeration be considered “fake news”?
iv) Does there need to be malicious intent behind the composition and/or
distribution of news for it to be considered “fake news”? Based on
research data collected by the author, the author suggests the following
fake news definition—news that is wholly fictitious, created and
distributed with malicious intent.

The governing body or industry-leading organization should take these components into
consideration when determining a definition.

2. Increase Awareness of Fake News Among IR and PR Industry Professionals
Awareness of fake news among IR and PR industry professionals is not in line with the
risks it represents. Therefore, awareness of this needs to occur. The author suggests a
combined effort between the SEC, NIRI, and publicly-traded companies, ranging from
micro-cap to large-cap, who have been affected by fake news to achieve this.
Specifically, these three entities should consult with each other and provide an industry-
wide “fake news” definition. The author believes that the promotion of a largely agreed
upon “fake news” definition alone will predominantly increase the awareness of fake
news. Other ways that the SEC, NIRI and fake news-affected publicly-traded companies
can promote this, thus, further increasing awareness among IR and PR industry
professionals is through NIRI’s IR Update, and press material developed and published

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by SEC and fake news-affected publicly-traded companies about the creation of a “fake
news” definition.

3. Improve Visibility of the SEC’s Tips, Complaints and Reporting Portal
A criticism that was present in the primary research data was that the SEC did not have
adequate resources or responses in combating fake news. Some responses that came from
survey participants were: “[The] SEC needs more enforcement resources dedicated to
fighting those that promote fake news,” “[There is] Not enough enforcement on clear
fake news and slander,” “Generally, the SEC is not responding quickly enough to make a
difference. The damage is done,” and “The SEC should also be tracking down more and
more on fake news and giving consequences.” One respondent even expressed “I'm not
aware it is making any effort to deal with it.”

In regard to reporting fake news to the SEC, the author believes that the SEC has an
adequate resource to report fake news, as well as other complaints, through its Tips,
Complaints and Reporting Portal. However, the visibility of this portal is low, as well as
its promotion in its information material. An example of this is its absence in press
releases about stock manipulation through fake filings and the distribution of bullish
articles without adequate disclosure. The author suggests that the portal be visible on the
homepage of the SEC’s website, as well as a link under its “Enforcement” drop-down
menu. The author also suggests regular promotion of the portal through press material
and on its social media pages.

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4. Educate Investors on News Literacy
Publicly-traded companies should encourage investors to become more educated in
recognizing fake investment news, and to take a proactive approach towards it. A
proactive approach can be creating and distributing marketing material, launching an
awareness campaign and/or social media campaign, and holding informational talk
sessions about news literacy and how to recognize fake news on investor days. Specific
actions that IR and PR industry professionals can encourage investors to take can be
signing up for investor alerts through the SEC’s website, as well as following SEC’s
social media. In particular, the SEC’s Office of Investor Education and Advocacy and
SEC News social media accounts. However, communication strategies and tactics should
be dependent on what publicly-traded companies think is the best way to effectively
reach their shareholders. The author encourages publicly-traded companies to consider
centering their messaging around these three main notions: 1. Company news
announcements should be investors’ first credible source of information, rather than
external sources; 2. Encourage investors to verify information with the IR team if they
are doubtful about any company information published; and 3. Investors should report
fake news specific to the company to the IR team. Ways that IR and PR industry
professionals can measure if their efforts are effective, or have been successful, is
through an increase in the amount of investor inquiries received regarding verification of
news sources and in the number of fake news reported to the IR team by investors.

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5. Develop a Policy or Plan on How to Address Fake News
Publicly-traded companies should be prepared to address a fake news “attack”. One way
to be prepared is to develop and implement a policy or plan on how to address fake news
directed towards a client or employer. Publicly-traded companies should also consider
this becoming a part of their crisis management plan—fake news has the potential to
threaten the integrity of a company. The author has created an example document, below,
to further demonstrate the function a policy or plan can have in the decision-making
process of addressing fake news.

Example Document

How to Address Fake News
Q1. Is the news in question written as a hard news piece or as an opinion piece?
Hard news: Go to Q2. Opinion piece: Ignore it.

Q2. Is the information coming from a reputable news source?
Yes: Go to Q3. No: Ignore it.

Q3. Can the facts and/or sources be verified?
Yes: Go to Q4. No: Contact the author of the article
or the publication’s editorial team for
verification or correction.

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Q4. Is the news spreading quickly through multiple news outlets?
Yes: Go to Q5. No: Keep an eye on its progress. If
the problem does not escalate, ignore
it. If it does escalate, publicly
acknowledge the fake news and
report it to the SEC.

Q5. Are you seeing an increase in investor and/or reporter inquiries?
Yes: Go to Q6. No: Publicly acknowledge it, but do
not report it.

Q6. Has the news affected your client/employer’s share price?
Yes: Publicly acknowledge it No: Publicly acknowledge it,
and report it to the SEC. but do not report it.

When fake news has come to the attention of a publicly-traded company, the following
steps should be taken to ensure the matter is dealt with swiftly, effectively and efficiently:
1. Inform Individuals
The board, senior management and all communication employees of the
publicly-traded company should be made aware of the fake news
immediately. It should be emphasized that no comments to the media will be
made until a decision has been reached about how to address the false news.
2. Follow the Company’s Fake News Plan or Policy
A meeting between senior management and communication professionals

84
should be held as soon as possible to walk through the fake news plan or
policy and plan.
3. Inform of the Decision
Once a decision on how the fake news should be addressed, all board
members, senior management and communication employees should be
notified of the outcome of the meeting immediately.
4. Act
If it is decided that the fake news in question should be publicly addressed,
communication tactics surrounding the addressment should be decided on a
case-by-case basis; it is dependent on the situation. If it is decided that the
fake news will not be addressed publicly, an internal memo should be sent to
all employees to inform them of what happened and why the decision was
made to not address the fake news. Ensure employees understand the thought-
process behind why the decision was made—it is important for employees to
know that the company is aware of what is being said about the organization
in the public sphere and that any false news made about the company will
always be taken seriously.

6. Implement or Maintain Effective Stakeholder Management
If a publicly-traded company has a strong relationship with its stakeholders, stakeholders
are not going to hold information credible that is held by a third-party unless it has been
published or verified by the company itself. By implementing or maintaining effective
stakeholder management, this demonstrates to investors that the company is tuned into

85
how stakeholders are feeling and that the company highly values stakeholders’ thoughts,
views, opinions and concerns.

Stakeholder engagement varies from one company to another depending on the needs of
stakeholders. The author has provided a basic plan below. If a company plans to
implement a stakeholder management plan, further research should be undertaken into
what methods and processes work best for organization.

1. Identify key stakeholders and stakeholder groups
The table below offers a strategic method for identifying stakeholders using a
rating scale with four quadrants
170
. The key focus area is the high influence
and high dependence quadrant
171
. This does not rate the importance of
stakeholders
172
. Rather, it helps determine the different levels and forms of
communication between the different stakeholder groups
173
.

170
Deloitte, Stakeholder Engagement, April 2014, https://www2.deloitte.com/content/dam/Deloitte/za/Documents/
governance-risk-compliance/ZA_StakeholderEngagement_04042014.pdf.

171
Deloitte, Stakeholder Engagement.

172
Deloitte, Stakeholder Engagement.

173
Deloitte, Stakeholder Engagement.

86

Figure 13: Stakeholder Identification Table
174

2. Develop an Engagement Plan
Once stakeholder groups have been identified, develop an engagement plan.
The timeframe of the engagement plan is dependent on what each company
thinks will be the most effective, as long as it forms a regular cycle to ensure
any key developments and changes are communicated within a reasonable
time
175
. The plan should include: communication frequency, method of
communication, channel of communication, and who is responsible for
executing and monitoring the communication and recording the feedback
176
.

174
Deloitte, Stakeholder Engagement, April 2014, https://www2.deloitte.com/content/dam/Deloitte/za/Documents/
governance-risk-compliance/ZA_StakeholderEngagement_04042014.pdf.

175
Deloitte, Stakeholder Engagement.

176
Deloitte, Stakeholder Engagement.

87
3. Identify Key Themes and Concerns
Once data has been recorded, identify key themes and concerns discussed
among each stakeholder group
177
. Ensure the concerns of stakeholders are
understood. If unsure, reach out and ask for clarification
178
.
4. Create a Process for Dealing with Concern Conflicts Between Stakeholder
Groups
The likelihood of conflicts between matters of interest is high
179
. An example
of this is economic/financial interest (profitability, cash flow, dividend policy,
pricing, growth rate, exchange control) versus environmental interest (carbon
footprint, water, waste management, recycling, compliance)
180
. Ensure the
company has a process in place to deal with conflicts between stakeholder
concerns
181
. This should be decided on a senior management level.
5. Feed Stakeholder Concerns Into Strategic Planning and Provide Feedback
Inform stakeholders of the outcome of their engagement with the company
and how it corresponds to business strategy and key performance indicators; a
company will need to present and articulate how its engagement with
stakeholders has shaped how the company is run or going to be run in the

177
Deloitte, Stakeholder Engagement, April 2014, https://www2.deloitte.com/content/dam/Deloitte/za/Documents/
governance-risk-compliance/ZA_StakeholderEngagement_04042014.pdf.

178
Deloitte, Stakeholder Engagement.

179
Deloitte, Stakeholder Engagement.

180
Deloitte, Stakeholder Engagement.

181
Deloitte, Stakeholder Engagement.

88
future
182
. All engagement processes and activity, including rationales for
action taken, should be complied into report form.

For companies who already have an effective stakeholder management plan in place,
consider how you may interact with stakeholders who hold fake news concerns. What
will your response be? Plan your response and re-evaluate processes based on this
possible scenario.

182
Deloitte, Stakeholder Engagement, April 2014, https://www2.deloitte.com/content/dam/Deloitte/za/Documents/
governance-risk-compliance/ZA_StakeholderEngagement_04042014.pdf.

89
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Appendix A: Media Content Analysis

Date Posted Article Outlet Key Points Themes Tone
February 26,
2017
Can 'Fake News'
Impact The Stock
Market?
Forbes
• Unverifiable stories look true due to their appearance in well-known media outlets.
• Manipulating asset prices is not new but since the 2017 election, more people are paying
attention. • Manipulation of stock market due to unqualified writers. • Fake news in the financial
market has been a problem for a long time, it wasn't called fake news, it was called pump-and-
dump. • News on social media can be manipulated to impact high-frequency trading algorithms that
rely on text to make investment calls.
•Manipulation Neutral
May 4, 2017
Fake news
infiltrates financial
markets
Financial
Times
• The SEC warns against increase in online paid stock-promotion campaigns. • Independent
commentary on investment research websites might be part of a paid stock-promotion campaign. •
Fake news stories can distort the efficient allocation of capital across the stock market by attracting
unwary investors to fraudulent companies. • Growth of fake news is an issue that could affect
professional money managers, especially those that rely on computer-driven strategies, as well as
retail investors. • Fake news is potentially a problem for quantitative managers. • Quants are
increasingly making use of big data and complex new data sources and they will have to be aware
of the distortions that fake news could introduce.

•Fraudulence
•Disruptive
Negative
April 11, 2017
SEC Cracks Down
on Fake Stock
News
CNBC
• Fake news can sway not just elections, but the stock market. • The SEC is cracking down. •
Companies have hired PR and communication firms to drive publicity for their stocks, and those
companies, in turn, hired writers who didn't disclose to readers or publishers they'd been paid to
write the articles. The authors submitted them to the financial information sites. • Security
promotion schemes have been around for years, from boiler room operations to spam email hawking
penny stocks. But the incursion of deceptive investment advice into mainstream financial websites
represents something of a new frontier for SEC action, prompting the agency to also issue an
investor alert.
•Fraudulent
•Misleading
Negative

93
January 1,
2017
'Fake news' has not
spared the financial
markets
Business
Insider
• Fake news - one of the dangers of our increasingly connected society—a tweet or video can go
viral spreading like wildfire unchecked with little regard for how truthful it may be. • Investors need
to do their homework before committing capital to either a long or short position.
•Being aware Neutral
April 11, 2017
Regulators find lots
of 'fake news' aimed
at stock investors
USA Today
• "Fake news" is not limited to presidential politics and conspiracy theories. • Investors have to be
on the alert for stock promotions masquerading as unbiased reports online. • People should never
make an investment based only on information published on an investment research website.
•Misguided
•Unreliable
Negative
February 22,
2017
Misinformed in the
Age of Information:
What is the ‘Fake
News’ Impact on
Stock Market
Prices?
Huffington
Post
• While the media has only recently started obsessing with fake news, the concept isn’t necessarily a
new one. • The intentional use of fake news has already been implemented as a marketing tactic in
the technology sector for quite some time under the term “fear, uncertainty and doubt (FUD). • The
impact of fake news on the financial markets and high-frequency trading is not yet clearly defined. •
Social media manipulation could be used in pump-and-dump schemes for low-quality stocks. • Even
with a few possible cases of manipulation of HFT algorithms, the practice does not appear to be
widespread.
•Misguided
•Unreliable
Positive
February 14,
2017
In The Era Of 'Fake
News,' Fake Filings
Can Impact Stocks
Benzinga
• Benzinga was emailed a press release that alleged McDonald’s Corporation MCD 0.15% would
make an "informal bid" to acquire all outstanding shares of Chipotle Mexican Grill, Inc. • The press
release, accompanied by a false SEC filing, which imitated the format of Marketwired
announcements and bore the wire's tag. • A Marketwired spokesperson confirmed the release “did
not come from us.”
•Illegitimacy Negative
April 13, 2017
Fake-news
fraudsters find new
ways to trick traders
Market
Watch
• From false articles to bogus SEC filings, stock scammers constantly adjust their ways in the age of
the internet. • The internet has been used for these types of market manipulation since its early
days. • “Pump and dump” schemes have morphed into a variety of tricks in the past few years.
•Fraudulence Negative
July 4, 2017
Allegations of ‘fake
news’ stretch
beyond politics
Washington
Post
• Modern take on what we call the old pump-and-dump schemes. • Pretended to provide
independent analysis on financial websites such as Seeking Alpha, Forbes, the Motley Fool and
Benzinga that were actually paid for by companies. • The problem is potentially more dangerous for
retail investors who are attempting to make investment decisions on their own.
•Fraudulence Negative

94
July 2017
Beware Fake Stock
News
Kiplinger
• Hundreds of articles contain false information that is planted. • The phenomenon of “fake news”
has infected some well-known investing websites. • The Securities and Exchange Commission has
brought civil fraud charges against 27 companies and individuals involved in stock-promotion
schemes that appeared on popular sites, such as Benzinga, Seeking Alpha and Wall Street Cheat
Sheet. • “Penny stocks” are more susceptible to promotion schemes.
•Cautiousness Neutral
April 10, 2017
SEC targets fake
stock news on
financial websites
Reuters
• A crackdown on alleged stock promotion schemes, in which writers were secretly paid to post
hundreds of bullish articles about public companies on financial websites. • Many writers used
pseudonyms.
•Illegitimacy Negative
June 8, 2017
Beware Fake Stock
News
NASDAQ • Phenomenon of "fake news" has infected some well-known investing websites. •Cautiousness Neutral
July 5, 2017
How 'fake news' is
affecting trading
algorithms [video]
CNBC
• Hiring of writers that look independent and would not disclose they were being paid, targeting top-
tier finance and business media outlets • There have always been people trying to pump up stocks,
but now it’s more prevalent because of social media. • This has potential for this to become a bigger
problem. • Estimated number of human stock pickers 10%, 90% are done by computer algorithms.
•Vulnerable
•Deceitfulness
Negative
July 5, 2017
How 'fake news' is
affecting trading
algorithms [video]
Yahoo!
News
• Hiring of writers that look independent and would not disclose they were being paid, targeting top-
tier finance and business media outlets • There have always been people trying to pump up stocks,
but now it’s more prevalent because of social media • This has potential for this to become a bigger
problem. • Estimated number of human stock pickers 10%, 90% are done by computer algorithms.
•Vulnerable
•Deceitfulness
Negative
April 11, 2017
Fake Investment
News Could be
Here to Stay
Barron's
• Ridding the nation of phony stock stories will be hard for the SEC. • Stories included false
statements and paid advertisements that were not disclosed as advertising. • Laws don’t exist for
the SEC to penalize the websites that run bogus stock articles on their platforms.
•Mischievous
•Cunningness
Negative
October 12,
2017
Why fake news is a
problem for Wall
Street
The
Washington
Post
• The growing reliance on technology rather than humans to make stock trades has made identifying
disreputable news a bigger challenge.
•Reliance
• Dishonesty
Positive and
Negative

95
April 10, 2017
SEC Targets Fake
Stock News On
Financial Websites
Fox
Business
• A crackdown on alleged stock promotion schemes, in which writers were secretly paid to post
hundreds of bullish articles about public companies on financial websites. • Many writers used
pseudonyms.
•Fraudulence

Negative
April 10, 2017
Business media has
its own fake news
problem
Axios
• Hundreds of articles published on top financial news sites were authored by individuals being paid
to promote certain biotech stocks • Payments were not disclosed to readers, nor apparently to the
sites themselves.
• Deceitful Negative

96
Article Who is to Blame?
Defines
"fake
news"?
Which form
of fake news
mentioned?
References
pump-and-
dump?
Mention the
2017
Presidential
Election? Interviews? Case Studies
Can 'Fake News' Impact The
Stock Market?
• Business news sites hiring
bloggers and writers who claim
to be qualified journalists.
• Misinformed or unreliable
sources
No Form 1 No Yes
• Fund Manager
• Director of Investing
of Investment Advisory
firm • Algorithm
Software Developer
• AP Twitter hack
• Beijing's stocks market and
housing market were affected
by fake social media news.
• Zoomlion • Cynk Technology
Fake news infiltrates
financial markets
• Publicly-traded companies
paying authors to write bullish
articles. • Criminals
• Government-sponsored
operators
No Form 2 Yes Yes
• Asset Manager
• Professor of Asset
Management at a
London Business
School • Chief
Investment Officer at a
Swiss Asset
Management firm
• Head of Alternative
Assets at a private bank
• ImmunoCellular Therapeutics
rise sharply • Great Rotation
comments made by Bank of
America Merrill Lynch
analyst in January 2017
• Lidingo Holdings• CytRx
SEC Cracks Down on Fake
Stock News
• PR and communication firms
• Publicly-traded company
conducting illegal activity by
paying for bullish articles
No Form 2 No No
• Director of the SEC’s
Office of Investor
Education • Seeking
Alpha managing editor
None

97
'Fake news' has not spared
the financial markets
None No Form 1 No No None •Herbalife • Galena Biopharma
Regulators find lots of 'fake
news' aimed at stock
investors
• Businesses and individuals
who deceive investors
No Form 2 No No
• SEC Spokesperson,
name not disclosed
•Lidingo • CSIR Group
• DreamTeam Group
• Mission Investor Relations
• Quality Stocks • Dunedin
• Galena Biopharma
• ImmunoCellular Therapeutics
• Lion Biotechnologies • Lavos
Misinformed in the Age of
Information: What is the
‘Fake News’ Impact on
Stock Market Prices?
• Social media Yes Form 1 Yes Yes None
• Great rotation analyst
comments • AP Twitter hack •
Beijing housing and stock
market • Cynk Technology
In The Era Of 'Fake News,'
Fake Filings Can Impact
Stocks
• People who distribute fake
filings
No Form 3 No No None
• Avon, false filings
• Fitbit, false filings
• Bank of America, false
filings • McDonald's
• Chipotle Mexican Grill
• Google • ICOA
Fake-news fraudsters find
new ways to trick traders
• Stock scammers
• Technology • Fake reporter
No
Form 1 &
Form 3
Yes Yes None
• Bloomberg Twitter bid
• Emulex hoax • Cytogenix
• Sweden Fingerprint card
• Avon • Kraft & Philips
• Fitbit • AP Twitter hack
• Transdigm • Audience
• Sarepta Therapeutics

98
Allegations of ‘fake news’
stretch beyond politics
• Scammers• Social media
• Computer algorithms
No
Form 1 &
Form 2
Yes No
• Lawyer, Finance
Professor from the
University of
Pennsylvania Business
School • Associate
director of SEC's
Enforcement division •
CEO of Analytics
company • Partner of
Law Firm
• Lidingo • Galena Biopharma
• DreamTeam
Beware Fake Stock News
• Companies and individuals
involved in stock promotion
schemes
No Form 2 No No
• Director of SEC's
Investor Education
None
SEC targets fake stock news
on financial websites
• Stock promotion scheme
writers
No Form 2 No No
• Director of the SEC
enforcement division
• Lidingo • ImmunoCellular
• Galena • Lion Biotech
Beware Fake Stock News
• Companies and individuals
involved in stock promotion
schemes
No Form 2 No No
• Director of SEC's
Investor Education
None
How 'fake news' is affecting
trading algorithms [video]
• Companies or individuals
involved in hiring writers to
pump up stock • The writers
• Social media
No Form 2 Indirectly No
• Washington Post
Journalist
• Lidingo
How 'fake news' is affecting
trading algorithms [video]
• Companies or individuals
involved in hiring writers to
pump up stock • Social media
No Form 2 Indirectly No
• Washington Post
Journalist
• Lidingo

99

Fake Investment News
Could be Here to Stay
• Individuals and entities behind
schemes • Federal laws • Stock
manipulators
No Form 2 No No None
• Galena • ImmunoCellular
• Lion Biotechnologies
Why fake news is a problem
for Wall Street
• Growing reliance on
technology
No N/A No No
• Law Professor from
Temple University
• Google, Apple & Dow
Jones • Fake Tweet of
Resignation of White House
Economic Adviser
SEC Targets Fake Stock
News On Financial
Websites
• Writers, paid and not paid No Form 2 No No
• Director of the SEC
enforcement division
• Seeking Alpha
Managing Editor
• Lidingo • ImmunoCellular
• Galena • Lion Biotech
Business media has its own
fake news problem
• Writers of stock promotion
articles
No Form 2 No No None None
100
Appendix B: Approved Statement for Use from Richard S. Levick, Esq.

To: Sue-Mae Watt
From: Richard S. Levick, Esq., Chairman and CEO of Levick Communications
Date of Email: December 27, 2017

Fake news is something that is clearly untrue, deliberate, and done with purpose. It is very
different from a mistake. It’s very different from what we think we know at the time only later to
be proven a lie or inaccurate or a mistake. I think some people who endorse fake news, they want
to get you onto this path to define truth. Do not get confused by the search of truth with the
campaign to create alternative truth, to create fake news.

“We’ve gone from a democracy to a tribal state—we believe in whom we know. The
epistemology has changed -- the study of truth -- how we get information. We used to gather
information, then come to conclusions. Instead, epistemology has changed where we start with
conclusions and then find the data points to support what we already believe.

101
Appendix C: Notes from Phone Interview with Evan Pondel

Interviewer: Sue-Mae Watt
Interviewee: Evan Pondel, President of PondelWilkinson
Date of Interview: November 10, 2017
Location: Los Angeles, CA Phone Interview

SW: How did the idea of writing about fake news in the IR industry come about?
EP: I was at a NIRI conference and the subject came up. I was making the argument that fake
news isn’t really that new. People are just describing it differently. It’s a new opportunity to put
promotional stuff out there. They have half-truths. Trump has changed the way people are
defining this stuff, even though it’s been around for a while.

SW: Why do you think people are talking about fake news differently?
EP: It’s on people’s minds now it’s being written about more. People have long known that
newspapers have inflated news in the press to make it sound interesting. This has been around
since the newspaper was invented. Trump has used this term to apply it to anything negative
about him or issues that involve him that he doesn’t agree with. Trump is using the fake news
term as a defensive mechanism. There are a lot of instances in the IR world—toxic news,
embellishment, exaggeration, hyperbole—where these things are used as a way to get people
interested or excited about something that may not be worthy of interest of excitement. There are
some publicly-traded companies that do this intentionally. Most companies do it with integrity,
but there are also companies that don’t. IR best practices is to communicate your story in an

102
accurate way across the board So, as an investor relations professional, your job is to ensure your
company is communicating its stories in an accurate way. Then, it’s up to the professional to
make that call. There used to be only a few legitimate channels for people to communicate. Now
there are all these different publications out there because of the internet and social media.
People can write in a way that’s persuasive, factual and accurate, and they perpetuate these types
of ideas by posting on blogs or media platforms that might not be legitimate news publications.
With advancements like search engine optimization, it snowballs. People start commenting on
something and it creates its own little universe of credibility. You have to really consider the
source of something when determining if you believe it to be fake news. Then, you have to look
at who is saying it—what is their agenda and why? Does it sound like something they would
say? As a communicator and a gatekeeper of words, the onus and responsibility is on all of us to
ensure our practices are aligned with standards that doesn’t perpetuate half-truths. It’s not always
easy because you’re under a lot of pressure in this business to make your client happy—your job.
The real craft of a PR person or IR person is to demonstrate why someone should care, through
facts, not just hyperbole and adjectives. If you can do that, then you’re doing your job. If you
have to rely on flowery language to tell a story, because the story itself can’t stand on its own,
then you are doing a disservice. It needs to be on our minds, as communication professionals,
how does what we do have implications for what the public is viewing as fact or as
embellishment?

103
SW: If one of your clients had fake news written about them, what would be the best way
to approach this with investors?
EP: It’s tricky, because as soon as you start responding to fake reports, you give credibility to
that story. You have to pick your battles. If it’s something that’s really driving your stock price
down, and there’s falsehood that needs to be clarified, then you need to respond. There’s
different ways to respond. You could Tweet about it, put out a press release about it, draw up a
Facebook post about it, add a comment to the story about it. But you have to understand that
when you do that, and you’re engaging with these people, then you have to accept responsibility
for that engagement and know that you are setting a precedent where people will expect you to
comment. An investor may say, “Hey, they’ve just put out a fake article. Why aren’t you
commenting now?” You have to ask: “If I respond to this, I have to rationalize to the investors
why I got into this one and not getting into that one. Once you start talking to people about it,
they think: “Oh yes, I guess that was a load of BS.”

There was fake news on my client, Monster Beverage, that their headquarters was being raided
by the FBI. It ended up being an investor, day trader type guy who wrote a Tweet, “AP:
Company headquarters, Monster Beverage, being raided by the FBI.” He was trying to make the
stock go down and sell it. He had a short position, where he was betting the stock was going to
go down. He made it look like it was coming from a legitimate news source. The stocks started
trading down by 10%. Bloomberg reporters called me and asked me what was going on. I said I
don’t know, I’ll have to call Monster. I called them and found out it was a false rumor. We
responded to that via Twitter because I knew the reporters were working off that medium, too.
We also didn’t want to blow it out of proportion either. We thought it was easier for us to put a

104
quick Tweet out there about it being a false rumor. In that situation, it was self-contained. But
sometimes it’s not always clean or self-contained. The guy was pursued by the SEC.

Your job as a communicator is to mitigate the damage. If you respond to that, you might be
creating more damage. Address the issue in a neat and tidy manner, execute it, then let it heal.
Then your skills come in. How do you do this in the most effective manner without creating
more damage or waves? It’s hard to do.

But then you have to check, is it written as an opinion piece, or is it fact? With opinion pieces,
note if the facts are correct or incorrect. You don’t necessarily have to reference the source of
where or who the article came from.

SW: What terms were used to describe fake news, 20 years ago, before the 2016
presidential election?
EP: I’ve heard the term, “fluff”, “hyperbole” and “sensationalism”.

105
Appendix D: Approved Statement for Use from Noberto Aja

To: Sue-Mae Watt
From: Noberto Aja, Managing Director of a New York-based IR firm
Date of Email: January 9, 2018

I haven’t seen fake news being a significant issue as it relates to investor relations, corporate
communications and communication on Wall Street.

However, over the past year or two, the term/concept of fake news has gotten added attention
largely on the back of its connection to the political landscape, and it has now caught the
attention of just about everyone, including the investment community. But, in a way the
investment community has been dealing with fake news for a long time, just different kinds of
fake news.

In the case of Wall Street, the biggest problems related to fake news, aside from the biases and
ulterior motives each of the various constituents may have and how that influences their
messaging, are both the sources and resources that are often questionable and unevenly
distributed. For example, not everyone can afford a Bloomberg terminal that offers timely and
accurate and expansive information. Thus, news aggregators that offer market information for
free often become the default source of information for many investors. And, the information
these sources offer is at times wrong/incomplete since there is little if any “vetting” process

106
taking place. Anyone can call themselves an analyst or an expert. Anyone can put up a bio or
resume, fake their name and their photograph, and post information behind false identities.

Whether the information is purposely put forth incorrectly or whether the source simply does not
know better, that’s another question. Unfortunately, the result is the same.

Technology might also have something to do with it—both in starting it and stopping it. Fake
news often seems to come from places were there isn’t much regulation, such as social media
and social platforms, and happens mostly in forums and blogs and conversation section of
articles. You often see this taking place across stock forums, such as YahooFinance, where
people can hide behind anonymity and ask questions, make statements and answer other people’s
questions in biased/incorrect ways.

But, I think everyone can agree that the trend in investor relations and corporate communications
has been to be more open and offer more disclosure to shareholders and the investment
community at large. Most public companies comply with SEC mandated filings, offer periodic
and timely news disclosures, report detailed quarterly results, hold conference calls where they
often take questions from analysts and investors, employ investor relations departments to handle
timely communications with the investment community, hold analyst/investor days, and often
make senior management teams regularly accessible. So, there is definitely a great effort being
put forth to offer accurate information.

107
Appendix E: Survey Report

Survey Report
The Effects of Fake News on the Practice of Investor Relations & Financial
Communication Survey

January 11th, 2018, 10:40 pm MST

Q1 - What city and country do you reside in?
What city and country do you reside in?
Wheaton, Ill., USA
West Hartford, CT, USA
Watchung, NJ
Washington, D.C.
walnut creek, united states
Vancouver, Canada
Vancouver, Canada
US
us
Unspecified
Unspecified
Unspecified
United States
United States
United States
United Kingdom
UK
Tracy, California, USA
Toronto, Canada

108
Toronto, Canada
Toronto
The Netherlands
Tel Aviv, Israel
Tel aviv
Tampa, Florida
Sydney, Australia
Sydney, Australia
Sydney, Australia
Sydney Australia
Sydney
Summit, New Jersey, United States
Stamford, CT USA
Springdale, USA
Sioux Falls, South Dakota
Singapore
Singapore
Santa Monica, CA
Santa Monica, CA
Santa Barbara, CA United States
San Mateo, CA, USA
San Jose, USA
San Jose, CA
San Francisco, USA
San Francisco, CA, USA
San Francisco, CA, United States
San Francisco, CA USA
San Francisco, CA

109
San Francisco, CA
san diego, USA
San Diego, USA
San Diego, USA
San Diego (San Diego County)
San Diego
Salt Lake City, UT USA
Ridgefield Ct usa
Richmond, VA USA
Redmond, WA
Rancho Santa Fe, CA.
Philadelphia, USA
Philadelphia, PA, USA
Philadelphia USA
Philadelphia PA, USA
Philadelphia PA
Perth, Australia
Omaha, Nebraska, US
Oakland, CA
NYC
NY, NY USA
Northridge, CA, USA
New York, USA
New York, USA
New York, USA
New York, USA
New York, USA
New York, USA

110
New York, USA
New York, US
New York, NY/United States
New York, NY. USA.
New York, NY, USA
New York, NY, USA
New York, NY USA
New York, NY USA
New York, NY USA
New York, NY
New York, NY USA
New York, NY USA
New York, NY
New York, New York
New York USA
New York City, NY.
New York City, NY, USA
New York City
New York
new york
new york
New York
New York
New York
New york
New York United States
New Uork
Nashville, TN, USA

111
Nashville, TN USA
Mountain View, California USA
Morristown, NJ
Montclair, NJ, USA
Minneapolis, USA
Minneapolis, MN
Minneapolis MN, USA
Medina, OH
Louisville, Kentucky, USA
Los Gatos, U.S.A.
Los Angeles, USA
Los Angeles, United States
Los Angeles, California, United States
Los Angeles, CA, USA
Los Angeles, CA USA
Los Angeles, CA U.S.A.
Los Angeles, CA
Los Angeles, CA
Los Angeles, CA
Los Angeles, CA
Los Angeles, CA
Los Angeles USA
Los Angeles
Los angeles
Los Angeles
los angeles
London, United Kingdom
London, UK

112
London, UK
London, UK
London, England
London, England
London uk
Lakeville, CT USA
Johannesburg
Houston, Texas USA
Houston, Texas
Houston, Texas Harris County
Houston, Texas
Houston, Harris
houston texas usa
Hong Kong
Greenville, SC USA
Fort Worth, TX - USA
Fairfield, CT, USA
Fairfax, Virginia, USA
Fairfax, VA
Emeryville, CA
Edmonton, Canada
Edina USA
Eden Prairie, MN
Durango USA
Detroit, USA
Detroit, United States
Detroit USA
Des Moines, IA

113
Darien, Connecticut USA
Dallas, USA
Dallas, USA
Dallas, TX
Dallas, Texas, USA
Copenhagen, Denmark
Columbus, Ohio
Cleveland, OH
Clermont
Chile
Chicago, United States
Chicago, Illinois, USA
Chicago, Illinois
Chicago, IL, USA
Chicago, IL, USA
Chicago, IL, USA
Chicago, IL USA
Chicago, IL USA
Chicago, IL
Charlotte, NC, USA
Carmel, IN USA
Canonsburg, PA, USA
Calgary, Alberta, Canada
Calgary and Canada
Buffalo, NY USA
Boulder CO
Boston, USA
Boston, United States

114
Boston area, USA
Boston
Boise, United States
Boise USA
Basking Ridge, NJ USA
Australia
Austin, TX
Austin, TX
Auckland, New Zealand
Atlanta, Georgia, USA
Atlanta USA
Alhambra, CA USA
Alameda, California

115
Q2 - What is your current occupation?

What is your current occupation?
Head of Investor Relations
PR Professional
Investor Relations Communication Consultant
VP Investor Relations
Director, Investor Relations
Investor Relations Consultant
Vice President, Investor Relations
Investor Relations Officer
SVP, Corporate Finance and Director of Investor Relations
VP, Investor Relations
Investor Relations Professional
IR/PR Consultant
Investor Relations
VP, Treasurer and Investor Relations
Managing Director
Director, Investor Relations & Corporate Communications
Investor Relations
Corporate communications Director
Director of Investor Relations
Investor Relations Manager
Investor Relations Manager
VP Investor Relations
VP Finance & Communications, which includes IR, PR and Corporate Communications
Investor Relations director
CFO

116
Director, Investor Relations
Director of Investor Relations
Global Investor Relations
PR Exec
Student and PR & IR Intern
VP, Treasurer and Investor Relations
Vice President of Investor Relations
Investor Relations Director
Director of Investor Relations
Investor Relations
Senior Investor Relations Manager
Senior Vice President at a communications consultancy
Managing Partner, IR and CC consulting firm.
Investor Relations
Finance Director - IR and Financial Planning & Analysis
VP, IR
Investor Relations
VP IR
IR agency owner and president
Senior Director, IR
CFO with responsibility for IR
SVP Investor Relations and Corporate Communications
SVP Strategic Communications
Senior Director, Investor Relations and Corporate Communications
Director IR
VP - Investor Relations
Vice President, Treasury & Invbester Relations
Vice President Head of Investor Relation

117
VP Investor Relations
Investor Relations
Investor Relations, Crisis Communications, Corporate Communications
Director, Investor Relations
Investor relations consulting
Investor Relations
Investor relations consultant
Senior Counselor, Investor Relations
Investor Relations
Investor relations managing director
Investor Relations
VP, Investor Relations
Partner PR agency
President & CFO
Senior Coordinator, Investor Relations
Investor relations consultant
IR Consultant
CEO, PR AGENCY
Investor Relations Consultant
Investor Relations Consultant
Investor Relations consultant
Investor relations
PR Consultant
Consultant
Group President
investor relations
investor relations and corporate development
Director of Investor Relations and Corporate Communications

118
Investor Relations
corporate communication consultant
investor relations account executive
Investor Relations Consulting
Investor Relations Professional
Public Relations and Integrated Marketing
VP, Treasurer and Investor Relations
Chief Strategy Officer
Investor relations manager
Investor Relations
Communications/PR Director
Investor relations
Managing Director, PR Consultancy
PR agency owner
Investor Relations
PR professional
VP at a strategic communications firm
Public Relations Associate
Financial PR
Corporate Director
Investor Relations Consultant
Senior Assocaite, Investor Relations
Manager of Investor Relations
SVP IR & Communication
CEO of an Investor Relations consulting firm
Accountant / CPA in Corporate IR Role
Investor Relations Consultant
CEO of pr firm

119
SVP Investor Relations
VP - Investor Relations
Investor Relations
Director Investor Relations
Director, Investor Relations
IRO
Chairman of Blytheweigh, a financial PR and investor relations consultancy
Head of Investor Relations
Vice President, Public Relations / Communications
IRO
CEO
IR consultant
Public relations
Managing Director
investor relations
Vice President of communications firm
Investor Relations Officer of Publicly Traded Company
Investor Relations
investor relations
VP IR and Corporate Development
Investor Relations
Director, Investor Relations
Public Relations
Investor Relations Advisor
Senior Director Investor Relations
Partner, financial PR firm
Managing Director / Partner of Communications Agency
Investor Relations

120
Investor Relations consultant
strategic communications
PR Executive
VP, Investor Relations & Corporate Communications
IR Counsel
VP of IR
Strategic communications consultant - financial, investor relations
Investor relations consultant
Investor Relations
President of a global PR agency
Senior Vice President, Investor Relations Officer
Investor relations
Senior Content Manager
PR consultant
Investment consulting CEO
Communications Professional, VP of Financial Services Practice
Director, Investor Relations
Vice President at a financial public relations firm
Public relations and business writer
Communications and Marketing Consultant
Director at pr agency
PR exec
IR
Investor Relations Professional
Public relations/marketing communications account director
Financial communications
president of a financial services PR firm
Managing Director, Investor Relations

121
Investor Relations Account Manager
public relations
Investor Relations
Investor relations and corporate communications consultant
Head of Investor Relations
Managing Director, Investor Relations & Corporate Communications
IR
Investor Relations / Corporate Communications Consulting
public and investor relations professional consultant
founder/senior exec of IR/PR firm
Public Relations
Director of Investor Relations
PR and IR consulting
VP, Investor Relations
Investor Relations Professional
corporate strategic communications
Managing Director of a Communications firm
SVP Investor Relations
Managing Director, Investor Relations
investor relations
Investor Relations Consultant
Strategic Communications Consultant
Marketing consultant for financial companies.
Senior Account Director, public relations consultancy
Investor Relations Consultant
IR
Director of IR
Investor Relations Professional

122
Investor Relations Associate
consultant
Financial Communications Associate
Graduate student
Unspecified
Unspecified
Unspecified

123
Q3 - Please select the relevant industry/industries you currently work in. To
select more than one industry, hold down the CTRL key while selecting.

# Answer % Count
1 Accommodation & Food Services 1.83% 7
2 Agriculture, Forestry, Fishing & Hunting 3.93% 15
3 Arts, Entertainment & Recreation 1.05% 4
4 Automotive & Transportation 3.14% 12

124
5 Banking & Finance 16.75% 64
6 Construction 3.14% 12
7 Education 2.36% 9
8 Healthcare & Social Services 7.33% 28
9 Legal 1.05% 4
10 Management & Enterprise 2.36% 9
11 Manufacturing 8.12% 31
12 Mining 4.45% 17
13 Professional & Business Services 18.85% 72
14 Real Estate 4.45% 17
15 Repair & Maintenance 0.00% 0
16 Retail Trade 2.88% 11
17 Science 1.57% 6
18 Sports & Athletics 0.00% 0
19 Telecommunications 3.40% 13
20 Technical Services 1.57% 6
21 Utilities 1.83% 7
22 Warehousing 0.26% 1
23 Wholesale Trade 0.52% 2
24 Other 9.16% 35
Total 100% 382

125
Q4 - How many years have you been in practice in your current industry?

# Answer % Count
1 Less than 1 year 3.55% 7
2 1 to 5 years 15.23% 30
3 6 to 10 years 16.75% 33
4 11 to 20 years 29.95% 59
5 20 or more years 34.52% 68
Total 100% 197

126
Q5 - What is the total market capitalization of the company you currently
work for?

# Answer % Count
1 Less than $50 million 41.62% 82
2 $50 million to $2 billion 27.92% 55
3 $2 billion to $10 billion 14.21% 28
4 $10 billion to $200 billion 13.71% 27
5 More than $200 billion 2.54% 5
Total 100% 197

127
Q6 - I am aware of fake news' existence within the investing industry.

# Answer % Count
1 True 77.39% 154
2 False 22.61% 45
Total 100% 199

128
Q6.1 - What made you aware of fake news within the investing industry?

What made you aware of fake news in the investing industry?
Social media has no regulation and therefore you can not believe until you know well the
source
Variety of sources...traditional and Social media as well as NIRI
Many times articles are published with no basis in fact. It is hard to get a correction printed.
First-hand observations of various poorly sourced/researched/analyzed articles and other
content
It has always existed. Reporters who exaggerate or omit or misinterpret things Short sellers
who do the same and then get reporters to write about it or now publish their work on Seeking
Alpha.
If by fake you mean incorrect it exists all the time
Information misinterpreting and mistaking insider selling, milestone events, and financial
disclosures
Regularly monitoring stock activity among small-cap companies and determining causal
factors.
The practice of spreading rumors in order to profit from subsequent stock-price movement is
widely known.
There are many paid platforms that are presented as news which can cause investors to
misinterpret placed /paid promotion as objective reporting
CNN, MSNBC, NY Times, Washington Post
Seeking Alpha is the #1 generator of misinformation for our company.
Commentary from sell-side analysts and think tanks
Seeing stories in the media that I know to be false.
media - also misperception about our company
Following Social Media trends
Alerts that I receive from vendors and the National Investor Relations Institute.
It’s my job to advise my clients about these matters. I read many news sources.
I have been aware of "Fake News" in every other industry for while now. Last year during the
election I think it became very prevalent and something you couldn't escape in any and every
industry you worked in.
Google alerts on my company with changed dates
Rumors of M&A activity that does not occur.
paying attention to news reports and media

129
Fraudulent and/or simply misleading info has been around probably since the financial
industry began.
In many markets in Asia paid-for content/fake news is a reality in mainstream media
It is largely an indirect result of the effect of fake news in the political and entertainment
spheres.
newspapers
reporting on fraud
There are rumors at times on industry consolidation that turn out to be false.
Rumors amongst traders
News
"Fake news" has long been around in the industry - i.e. hyping stock value and performance.
It's not new; people have been circulating and dealing in rumors for decades. It's just easier to
do now.
We read it every day on sites like Seeking Alpha and are forced to respond to it because
believe it's real.
News articles. Proxy fights. Short campaigns against companies
Been in and around Wall Street and investing for 24 years. I have seen a lot of pumping and
promoting
Communications Dept.
Have seen it.
Rumors to promote a short..
market feedback/gossip and a new unexpected line of questioning
Small cap securities have fraud and hype attached with them. Fake News in these
circumstances could be fraud. Our firm is very dilligent to avoid these issuers.
There has always been fake news if you include stock touting and stock promoting - by
telephone or social media.
Seen it, read it
Bloggers, short report analysts and in some cases major media news outlets
People who try to manipulate the market. Often these are people who try to short stocks
I AM A HEAVY CONSUMER OF ALL MEDIA; WEB, TELEVISION, SOCIAL, TRADE
MEDIA
No idea.
Donald Trump
information not aligning with commentary

130
blah blah blah
National news media
Wall Street has always been driven, in part, by fake news (rumors).
Media stories
Nothing particularly current - there have been fake news releases published occasionally for
the 25+ years I've been in the business. Plus, the financial markets are full of stories, rumors
etc. that are often created to serve various agendas.
I wouldn't say "fake news" for our industry, mostly just repeated untrue whispers.
Reading the news.
People plant fake news on message boards and other place to try and influence stock prices
from time to time.
rumors in financial markets impacting stock price
Other legitimate media reports
Regarding the mining industry, the media likes to portray that regional areas are being ruined
and that the community hates the companies, when in fact they appreciate the jobs and
economic benefits regarding an increase of population and spending. Social media is the
biggest culprit in spreading falsified information. It acts as a form of Chinese whisper whereby
the ideas take a life of their own and reconfirmed by the social bubbles in which one is
engaged. Advertising on social media is another culprit. Many companies will advertise very
misleading investment opportunities. In another aspect, social activists will spread false
information and publish it via media releases and a lot of journalists are so time pressured that
they don't accurately evaluate the real facts. In Australia, unions can often bully employees of
organisations to satisfy their agenda. This information utilised to support their agrument is
often false, misleading or exaggerated, and then spread via social media.
Wild performance claims
It's always been around, vested interests have always spread falsehoods to benefit themselves.
News reports
Prior to moving to a PR agency, I was in investor relations. Certain hedge funds have always
used fake news (even before it was a term) to create a rumor that would briefly move a stock
price and allow a quick profit.
I've seen fake SEC filings in microcap stocks discussed in news media
Ridiculous announcements being distributed
Company monitors social media sites for mention of name.
The terminology is different, but the "pump and dump" practices have been around as long as I
can remember. There are firms that will fabricate and/or embellish company news with the
intent to increase the stock price for a time in order to sell shares for a higher price.

131
I see it regularly
Non governmental organizations (NGO's) regularly promote their agenda with "fake" news.
News stories
Personal experience
CNN
News stories, talking to colleagues
Increased prevalence of "sponsored" posts
false stories placed in national media for which people subsequently went to jail
poor journalism
I read false news stories every day.
There have always been rumors and false statements, but now those that benefit from them can
publish via the internet.
Media, articles, client conversations
Observations
My role requires an understanding of the media
From the news
Articles pushing stocks
media contacts I spoke to after entering the communications field
Investors on sites such as SeekingAlpha and reporters for media outlets as sophisticated as
Bloomberg and Reuters have at times played fast and loose with the facts in order to further
political or other agendas.
False story about our company being acquired by Chinese pharma company.
the media and peers in IR
This depends on your definition of "Fake News". I consider Fake News as publication of
something that is intentionally misleading, or something as "true" or factual when it is really a
guess.
Generally, whenever a company is under a short attack, the precipating event was a rumor,
false story or flat-out wrong story posted to on one of the investor blog sites.
Graduate class on creating and sharing knowledge
Speaking with reporters and seeing articles appear in social media
News reports
the internet

132
Looked around me, and read. Not the smartest question...
Fake news exists in all industries
social media
News reports of planted information in order to move stock prices
Social media
the media
Market reports of stock moving news which was ultimately determined to be false news
professional experience
proliferation of online sites that purport to be definitive sources of business news and insight
that clearly miss the mark in understanding the underlying context of issues, thus limiting their
ability to sniff out truth from falsehood.
SEC activity and media coverage of such activities
We're conscious that fake news is an increasing trend across all industries - it first became
widely known around Trump's election, and is now being fuelled by social media. It has never
been easier for people to be wrong, and at the same time feel more certain that they are right!
In some sense it's always existed in terms of deliberate falsehoods being propagated for
financial gain. From the perspective of a technology play by those out to make money from
advertising I've only been aware of it for a couple of years and mainly not specifically relating
to ivnestment.
National headlines
There is a general awareness of 'fake news' across industries.
One of my clients (a real estate investment company) found a fake story about their business
Unsure
Reporting on it from business media
First hand knowledge of media stories.
News articles saying facebook stood accused of spreading fake news
Definitions are key, there is fake news, biased news, misleading news and opinion. Most
financial information is regulated so that's mostly cut and dried. However, at the intersection
of finance and politics there is an abundance of biased or misleading news coverage. A prime
example is how media covers issues like mortgages and credit access. The basic narrative is
banks are evil and want to steal people's houses. It's completely false (it's bad business) but the
theme persists.
It's been an issue long before "fake news" was a thing. Articles are published all the time that
reflect people's personal opinions on a stock, likely to align with how they are invested in said
stock, and there is little you can to do correct it.

133
Seeking Alpha, Twitter, and other financial bloggers/writers bringing light to the issue
news coverage of fake news episodes
Hyperbolic headlines.
There are always rumors flying, some of them wrong.
Fake news in general has been something that has come to the forefront recently due to a
number of factors, including the growth of social media, the proliferation of small news
platforms or news aggregators, the growing mistrust with our politicians and a host of other
factors. Having said that, the investment industry does not seem to be very much impacted by
it. Given that it is a heavily regulated industry and that public companies are very closely
monitored by investors/shareholders/analysts the fostering of fake news much more limited
that in other sectors.
Investment scams
First, market rumors and speculation have always existed. But in the internet age, in my
opinion it has perpetuated the problem. People who write for financial blogs (like
SeekingAlpha) when writing investment opinions on my clients have gotten facts wrong or
have written things that were not true about the Company without reaching out to us first. In
some cases, we were able to get corrections written, in others we were unable to do so. Our
shareholders typically hear these rumors first, so they are the first to let us know when
something false is written about the Company. In certain cases other public companies seeking
an edge in a contract negotiation with our client or our client's peer (for example) would plant
a false narrative with a journalist. When that has happened it has caused the sector to trade
down.
seeking alpha
Blog content and conversation
The name "fake news" is new, but deliberate attempts to mislead the investing public have
been around for a long time.The most common forms are press releases purporting to be from
a company, or invented news stories passed off as true on message boards.
Media reporting patently false news made me aware
Not sure I know what you mean by fake news. Is that like the Emulux fake news release issued
through BusinessWire about 15 years ago? Or do you mean short-selling trolls going on social
media to say how disappointed they are in the stock? Or do you mean like when Henry
Blodget wrote glowing analyst reports on dot-com bombs? Seems it's about as old as our
markets.
When my investors cite it to me
Unusual movements in equity prices
I work with media daily
articles on social media

134
rumors have long been shared as truth on company message boards (on Yahoo Finance and
other investing websites).
knowing stories that are depicted wrong
Media coverage
Short type information on Seeking Alpha
The structure of our markets makes it quite easy to manipulate them. Additionally, the rampant
number of ICOs is worrying. At this point, no industry is immune from fake news.
Media
bla bla
Fake news has been prevalent in penny stocks and thinly traded stocks for years. The SEC has
taken enforcement actions against certain people who would pump up a stock with fake news
and then dump their shares.
CNBC
Trump's use of it
the U.S. presidential election.
Unverified articles on mid-tier investing websites such as the Motley Fool

135
Q7 - I first became aware of fake news from the 2016 U.S. presidential
election.

# Answer % Count
1 True 35.64% 67
2 False 64.36% 121
Total 100% 188

136
Q8 - Fake news is negatively impacting the investor relations or financial
communications industry.

# Answer % Count
1 Strongly Disagree 5.52% 10
2 Disagree 17.68% 32
3 Somewhat Disagree 9.39% 17
4 Neither Agree nor Disagree 19.34% 35
5 Somewhat Agree 28.73% 52
6 Agree 17.13% 31
7 Strongly Agree 2.21% 4
Total 100% 181

137
Q9 - Fake news has impacted the way I conduct my work.

# Answer % Count
1 Strongly Disagree 14.75% 27
2 Disagree 30.60% 56
3 Somewhat Disagree 6.56% 12
4 Neither Agree nor Disagree 15.30% 28
5 Somewhat Agree 21.31% 39
6 Agree 9.84% 18
7 Strongly Agree 1.64% 3
Total 100% 183

138
Q9.1 - Explain how fake news has impacted the way you conduct your work.

Explain how fake news has impacted the way you conduct your work.
Double checking the sources of new news is more important than ever so as not to perpetuate a
truly fake item
not so much fake news but biased reporting - that is people having a negative view of banks
and the financial services industry as politicians pander to popular thinking and do not allow
the truth to emerge (ie Australian banks were never bailed out during the GFC but it is a belief
that is held - in part due to the banks receiving (and paying) a government guarantee on their
debt) little is done to refute this misconception
More reporters nowadays seem to be willing to not be entirely forthcoming about why they
want to interview executives at your company. They are not honest and upfront about what
they want to talk to you about and what kind of story it will be in. Now that everybody can see
everything on the Internet, a reporter on one side of the country can write something
misleading about a company, and investors on the other side of the country can get concerned.
If I interpret 'fake news' as encompassing stock rumors, then from time to time there have been
rumors that later proved false (i.e. fake) that affected our stock price.
Incorrect of false information posted as fact has caused confusion and despair among our
investors.
Too many retail investors do not know the agenda of the author/publication and believe
everything that they read.
within the investment community, it is very easy to start rumors that negatively impact
financial security prices. "News" is more often times mistaken for actual facts, when in reality
its only an opinion. My job has changed to make sure our message is 100% consistent with
prior messages in order to control information flow. Any deviation from said message is
immediately assumed to mean something else.
I spend time looking into the credibility of the sources in the media, whereas before I took it
more at face value.
I do PR so it’s my job
You have to thoroughly read every article that you are going to send to clients to make sure
that you do not accidentally send them fake news. You also have to check all sources
contributed.
I make sure that I can trust my sources of information
It has seeped into all communications, without exception, creating a more dense environment
of suspicion and distrust and rendering true transparency far more difficult to achieve.
I make sure that I double check and document facts so they can be independently verified.
Investors read the news and call the company with questions. We are forced to respond,
talking away time for other, productive activities and real issues.
it has always been the role of investor relations to counter misinformation in the marketplace
about the company whether that misinformation has been unintentionally or mischievously
spread

139
I see this as an issue of explanantion. In the investor relations world. Fake news is news put
out by a company that is fraud. I think you are referring to news by CNN and the likes
regarding the recent election
Need to be more aware of what is being written and by whom. More prepared.
You have to spend time debunking false stories and rumors that are published as legitimate
news.
I often have to explain to investors that the new they read about is a rumor or unfounded
SO MANY PEOPLE BELIEVE THAT IF IT'S ON THE INTERNET IT'S TRUE. WE
HAVE TO HELP OUR CLIENTS FOCUS ON GETTING EARNED LEGITIMATE PRESS
COVERAGE
importance of alignment regarding continuity of messaging and actual results, although this
was always the case.
I monitor news media more closely for accuracy
Early responses required to correct misperceptions in the market
I am more vigilent about the sources of information I trust; I research an organization before I
take their data as factual
It has made me ensure to have data to back up all of the sources I offered media.
Need to evaluate the reasoning for macro factors impacting the perception of our industry and
company
An increased level of diligence around data and source verification
Investor messages boards can easily distort perception and investor awareness to actual events
and trends
poor journalism leading to mischaracterizations leading to unnecessary investor/analyst
queries
Part of my job is now helping to re-educate clients, consumers and the general public as a
result of fake news they have consumed.
Shifting the way we approach content creation and delivery, consumers expect trusted
professionals to curate relevant content and separate the real from the fake
Qualifying sources more carefully. Investigating economic interests of witnesses and analysts
I find it easier today than ever to influence journalists. If I can influence a journalist, imagine
what others can do. It makes me sceptical to news and harder to advice my clients.
Again, I do not view fake news as something new to affect investor relations, but more easily
spread. For example, a major publication has been following a local story based on one
person's opinion. Investors who track the subject found the story and questioned my company
whether the trend at work in the story would affect us, when it had very little basis in fact. A
few more stories like that, and it becomes a self-fulfilling prophesy.
Most investors do their own homework, but the proliferation of partial or misleading
information via tweets or less established journalism sources means I spend a lot of time
educating investors and answering questions about false information.
We use it, we are aware of it, we try to avoid it. It is a fact of life for any communications
professional these days.

140
I still rely on strategic communications to correct misperceptions in my company's story. The
difference is that the misperceptions were are sometimes blatantly and intentionally placed.
Monitoring social media to address "fake news" and provide relevant facts. Particularly true
with retail (non-institutional) investors.
If by "fake news" you mean rumor or falsehood, this has been around as long as investors have
put capital at risk
We now must be aware of it and be continuously monitoring and then determine how to
manage my clients' reputations should they be impacted.
We're more conscious of fact checking, and more wary of online commentators & 'influencers'
More from a consumer standpoint, fake news has become a hook by which to share timely
ACCURATE information on behalf of my clients.
Fake news is different from false or misleading media/government information, which has
been around forever. what has changed is the public's willingness to believe information that is
obviously not true. I sometimes write about the economics of climate change and
sustainability, and it requires extra effort and meticulous sourcing to overcome the false
narrative that is out there.
We have to be much more thorough and far reaching in our research of topics in the media as
well as vetting media outlets and reporters. I think it has also partially driven a trend to self
publishing by many organizations.
Have to be more careful than ever to make sure our legitimate news releases can be easily and
positively identified as such, and that opponents aren't able to spread false news about clients
without our having recourse.
Much more thorough with sourcing materials.
Need to respond to false rumors often
When something false is published on a blog like SeekingAlpha or a market rumor is picked
up by the media, we have to spend a great deal of time chasing down the person who wrote the
inaccurate blog post to try and get a correction and/or deal with a flood of incoming calls from
worried investors about a market rumor, etc. Essentially, it wastes time that I could be
spending doing other value-building work.
Companies (my clients) can be negatively impacted by false stories about them, which requires
constant monitoring, careful preparation, and rapid response. Most such damage takes a lot
longer to fix than to cause.
It has allowed me to benefit financially by exploiting the fake news promulgated by others.
I have to spend much more time scanning news and social media for fake news pertaining to
my industry and clients.
I take information I see and hear with a grain of salt.
When a fake news article appears that affects one of my clients, I have to go to work on a
crisis basis.
We have to devote time to answering investor questions about rumors they've heard on
message boards. It can impact a company's stock price, so we have to address the rumors.
Short theses using fake news

141
Q10 - In the past year, how many times have you directly dealt with the
impact of fake news?

# Answer % Count
1 Zero 41.57% 74
2 Once or Twice 30.90% 55
3 Three to Five Times 11.24% 20
4 Six or More Times 8.99% 16
5 Unknown, Uncertain Or Don't Know 7.30% 13
Total 100% 178

142
Q10.1 - Did the impacts of fake news require you to file documents with the
SEC?

# Answer % Count
1 Yes 3.33% 3
2 No 96.67% 87
Total 100% 90

143
Q11 - Rank your most important concerns about the future of the investor
relations or financial communications industry.

Question 1 2 3 4 5 6 7 8 9
Tot
al
Fake
News
6.51
%
1
1
5.92
%
1
0
6.51
%
1
1
9.47
%
1
6
13.0
2%
2
2
12.4
3%
2
1
20.1
2%
3
4
17.1
6%
2
9
8.88
%
1
5
16
9
Cryptocur
rency
9.47
%
1
6
5.33
%
9
4.14
%
7
5.92
%
1
0
11.2
4%
1
9
5.33
%
9
14.2
0%
2
4
24.2
6%
4
1
20.1
2%
3
4
16
9
Political
Influences
10.6
5%
1
8
8.28
%
1
4
15.3
8%
2
6
14.7
9%
2
5
18.3
4%
3
1
10.0
6%
1
7
8.28
%
1
4
9.47
%
1
6
4.73
%
8
16
9
Social
Influences
5.92
%
1
0
7.69
%
1
3
15.3
8%
2
6
12.4
3%
2
1
20.7
1%
3
5
15.3
8%
2
6
13.6
1%
2
3
4.73
%
8
4.14
%
7
16
9

144
U.S.
Economy
24.2
6%
4
1
20.1
2%
3
4
11.8
3%
2
0
7.10
%
1
2
8.88
%
1
5
5.33
%
9
7.10
%
1
2
7.10
%
1
2
8.28
%
1
4
16
9
Global
Economy
17.1
6%
2
9
17.7
5%
3
0
23.6
7%
4
0
5.33
%
9
8.88
%
1
5
2.37
%
4
7.10
%
1
2
8.88
%
1
5
8.88
%
1
5
16
9
Industry
Performan
ce
30.7
7%
5
2
20.1
2%
3
4
10.6
5%
1
8
5.92
%
1
0
7.10
%
1
2
2.96
%
5
2.96
%
5
8.28
%
1
4
11.2
4%
1
9
16
9
Corporate
Social
Responsib
ility
6.51
%
1
1
5.92
%
1
0
11.8
3%
2
0
11.2
4%
1
9
20.1
2%
3
4
18.9
3%
3
2
11.8
3%
2
0
6.51
%
1
1
7.10
%
1
2
16
9
Other
14.7
1%
2
5
1.76
%
3
2.35
%
4
5.88
%
1
0
20.0
0%
3
4
4.71
%
8
8.82
%
1
5
3.53
%
6
38.2
4%
6
5
17
0

145
Q11.1 - What other concerns do you have about the future of investor
relations or financial communications?

What other concerns do you have about the future of investor relations or financial
communications?
New regulation in Europe (mifid)
None really
MiFID 2; MiFID 2; MiFID 2!!!; Overwhelming amounts of non-financial information (noise);
Implementation of MiiFid
MiFID II
the proliferation of misleading information about companies and their performance
Role of AI increasing in financial communications (creating and distributing automated
content and diminishing the role of human analysts)
I assume this relates to the "other" category on the page before. The media is on a Salem witch
hunt for Weinstein like sexual predators in the boardroom.
Regulation, MiFid
Corporate M&A is reducing the number of U.S. public companies which have contracted
significantly since the late 1990's. Additionally, the new MiFID 2 regulations in Europe is
likely to dramatically impact the equity research business globally.
Movement to more passive investing
The impact of what will inevitably be around the clock trading. Quality of business news
reporting is on the wane and many reporting errors occur.
Passive investing, declining sell-side coverage of smaller companies.
User-generated message board and social media which spread rumors and unsubstantiated
opinions are detrimental to IR - readers of the sites think that the opinions and speculations of
the posters are legitimate corporate information.
Thankfully, buy-side investors and sell-side analysts do not use or rely on social media for
company financial information. This may be more true in consumer facing industries.
MiFID II
while things may change, i believe the same issues i face today will be around for years to
come.
Trend toward passive investing. Can cause equity prices to move up or down in ways not
driven by performance.
With more and more investing being done by computers or models (e.g not actively managed),
IR and financial communications are becoming less and less important.
Reporting and disclosure requirements, and continuing to make sure that investors have a clear
understanding of the company.

146
In the investor relations world, most people will do the appropriate diligence to sort out fake
news from facts. Fake news as a whole is more salicious in the political realm, not so much in
my opinion, in the investor world. Could it impact us - of course, but you can combat it with
real news or other types of publicity.
It's all about financial performance of the Company
Lower quality sell-side research coverage for SMID-cap companies as a result of MiFID II
regulation in Europe.
No real concerns
None
it is going to become incredibly difficult to sort through the fake vs real news on reputable
websites and that is going to be a major problem for all industries if that does happen.
Sell-side analyst research
Growth of ETF and Index funds in a financial crisis.
nothing
Impact of MiFID II on the sell-side research industry
I think the primary issue we face is the regulatory regime that is driving investors away from
individual stock selection, especially when it comes to companies that are not listed on major
exchanges.
Too much regulation
That the industry will become irrelevant
The capacity for sincere language to be discerned from hyperbole and fabrication.
algorithims driving investment decisions
none that are material at this time
None
Limits placed on brokerage firms that assist with Corporate Access
Cultural changes
Trump.
MiFID II can potentially re-shape the industry.
There are a number of issues. First, the rise of social media implies a couple of broadly held
beliefs, most of which are untrue: 1) Everyone has an opinion and the right to express it, 2)
Everyone's opinion is valid and should be expressed, 3) companies and individuals should
respond every time someone expresses an opinion or writes a fake news piece. People,
including reported, are focused on the speed of reacting--it doesn't matter whether something
is right if they're first with whatever the story or remark is. So overall, communications are
becoming more difficult--more diificult to find the time to respond/present a message with

147
adequate thought/care, more difficult to separate real from fake, more difficult to control your
own company's message.
Passive vs. active investors; influence of ETFs; shareholder activism; regulatory changes
related to disclosure
mifid,
Blogs and chat rooms spread fake news all of the time and it makes my job much harder than it
needs to be. There is no recourse for these small retail investors that shoot their mouth off and
there is no way for the company to go after these people. This is hurting shareholder value and
company credibility and their is no regulation in place to stop it.
quality of sell-side reports
The dominance of computer and fast trading.
Too much regulation.
Very important to keep your credibility
increased shareholder activism (and their employment of fake news) the lost of
professionalism in the broker industry
Small companies getting through FINRA. We have to IPO'S that FINRA has had for over a
year. They are taking the place as a new watch dog and are hurting the integrity of US
financial markets by the time it takes to clear a new issue
Every time we make an acquisition or there is a significant drop in the stock price, attorneys
file lawsuits and then look for plaintiffs (i.e., retail shareholders) who had a short term (as in a
day) loss on paper.
Commoditised, and cheap. Robo investors / passive investment startegies making comms
redundant.
There is too much information for shareholders to absorb. It is an inefficient process - many
calls and meetings that are essentially the same.
The structure of the capital markets and decline of public companies, MIFID II, increasing
regulatory burdens with social reporting requirements.
Investors are confused about what they hear from the company and whether they can trust the
information
I HATE THAT THE SEC SAID THAT A FACEBOOK OR TWITTER POSTING WAS
JUST AS GOOD AS OTHER PUBLIC DISCLOSURE MEANS. THERE ARE MILLIONS
OF INVESTORS THAT DON'T USE FACEBOOK OR TWITTER
changes in legislation or regulation such as MIFID II
Clients/companies do not place as much emphasis on investor and financial communications.
None
n/a
Fewer companies are going public, leading to a decline in the IR profession.
Cybersecurity.

148
Regulation
IR is a function of publicly held companies and Congress, beginning with Sarbanes-Oxley is
responsible for great damage to the attractiveness of being publicly held. Until the politics and
legislation change, the IPO market will remain moribund and the number of public companies
will continue to decline.
1) The number of publicly-traded companies is roughly half of 2008, so IR is not a growth
profession. 2) The sharp upswing in passive investing = less need for IR professionals to
interact with active money managers. 3) MiFID II will reduce sell-side research and make it
harder for smaller companies to get noticed by investors. 4) The continuing exodus of sell-
side research analysts who then take all the plumb IR jobs from the rest of us.
IR could become unnecessary overhead
I don't have others
n/a
misunderstanding of company's long term strategy
none
- MIIFI II - this will change a lot in the investor relations world. We will no longer be able to
get coverage for small cap companies without it being paid. There are a lot of paid research
houses popping up that require $30-$60k for an analyst report to provide some legitimacy
around the company. These companies, particularly in technology, are already struggling. -
stricter regulation - I would consider ICOs to be a concern but I think they reinforce the need
to do capital raising via a professional. It's basically listing a private company before they have
the capabilities to be public. - Shrinking media. journalists are consistently being cut in
Australia to a large extent. This makes it especially hard to gain coverage for micro- and small
cap companies, creating further disparity. Journalists simply don't have time. I have spoken to
many journalists who just don't have the time because their small cap journalists have been
cut. We are coming to stage where objective judgment and coverage no longer exists.
Transparency is lost through social media in which every person acts as their own outlet and
pushes their own agenda to an audience with a similar mindset. - ^ this has resulted in more
smaller listed companies being required to use advertising, paid-for corporate access events,
and advertorials. This again, questions the purpose of investor relations outside of just a
"connector" as these capabilities can be easily replicated internally by a PA... Why would a
CEO pay an investor relations professional a monthly retainer so simply connect them with
other promotional companies that require further financial expense?
-
Adverse regulatory control introduced to cover the minority of transgressors and therefore
penalising the majority of organisations who do not employ fake news
Corporate Governance
Regulatory changes
Changes within the industry, for example regulation changes

149
The influence of fake news on ESG issues in financial communications
Transparency of investor priorities
Regulations
Regulatory
Automation
China economy
Short-term focus by Wall Street vs. long-term value creation. Excessive use by some
companies of "adjusted" or "core" or non-GAAP results/outlook. MiFIID II in Europe and how
it may impact the US in the future.
Impact of Mifid 2 regulations from Europe
MiFID II
Changes in the market structure, i.e. majority of $'s managed by passive funds
None.
Creeping regulation results in ever more convoluted communications which end up being
written in bad English by lawyers
not a concern - but the Investor Relations Charter is going to be the price of admission soon
N/A
Increase in passive investing
Ability to generate enough content to meet consumer demands
shareholder identification transparency
Increasing isolationism, pursuit of profit at the expense of the global environment
That everyone today can call themselves a practitioner, there are no standards to follow and
therefore the quality of the work is declining
It's moving more to social media
The advent of technology or robo investing / money management based on instant analysis of
data or linguistics.
Bots and AI digesting financial communications and misinterpreting content.
shrinking number of sell side analysts and increase of passive investing
Changing Global regulations
Market structure and the predominance of index/quant funds are eliminating the need for
companies to communicate with investors. There's no need to differentiate a company or talk
to investors when a significant percentage of ownership is held by investors using algorythmns
to decide who, what and how much to invest.

150
activists
None
None
the growth of passive investing
- Geopolitical instability - Populist politics - Emergence / dominance of companies from
regions (China, Saudi etc) with poor corporate governance and disclosure requirements
Under qualified staff and professionals to enter the profession.
MIFID II, performance of the equity markets, active to passive rotation
(1). Investment dollars are shifting from actively managed funds to passively managed
funds/ETFs; (2). MiFID has the potential for further reduction in the number of sell-side
coverage firms, or a shift to paid research model; (3). Investor Relations professionals are
increasingly NOT finance people, as many firms have structured a VP-level position over
Corporate Communications/PR + IR, and (4). Shorter-term investment duration has reduced
the value of "relations" in Investor Relations.
the speed with which news fake or real travels, and the ability of companies to keep up with it
under current SEC laws.
Companies choosing to communicate directly with customers and investors, thereby cutting
out the middlemen like IR and PR firms. Automated news operations further reducing staffs at
media outlets High quality journalists moving to PR firms or in-house to corporations for both
money and job security
Quantitative trading; increasing prominence of passively-managed money.
Alternative capital markets, changing business models in the media
n/a
Transparency; activist shareholders
Dearth of good media coverage of public companies; shrinking investment in small cap and
micro cap; growing influence of indexes & ETFs that seem to not differentiate between quality
of earnings and management credibility & future vision.
Ensuring continued compliance with regulations (e.g. Reg FD).
none
MIFID II will dramatically change the nature of core relationships in the investment
community; companies/issuers, sell-side analysts and their investment banks, institutional
investors. This will present challenges and ultimately, opportunities to reshape engagement
Lack of professionalism across the industry.
None specifically - well covered by previous factors. Geopolitics is key
A large portion of IR work will be automated and we are already seeing this. High-value
strategic IR work will be the focus for practitioners in teh future.

151
n/a
With the wave of sexual harassment and misconduct claims coming to light lately, I suspect
this will be an increasingly important issue to address in the financial services industry and
will require substantial crisis communication capabilities.
The entrance of former sell-side analysts to the profession.
The dwindling number of journalists and publications.
Enforcement, or lack thereof, of existing disclosure rules and mutti-national corporate efforts
to skirt those laws
na
Artificial intelligence from an employment perspective. General honesty and integrity in
comma industry (not fake news, personal/institutional honesty
Shrinking media landscape - more consolidation ICO type IR function
None
The over-regulation of investment banks and their ability to provide sell-side research as a
bundled service, rather than a stand-alone product.
Too much noise, not enough focused news or explanation of what is being invested *in. Too
many financial/investor relations articles focus on ratios or talk buy/sell based on past
performance, rather than reporting industry context and how actions might impact
performance.
Automation
none I can think of
Company specific performance is the biggest driver
The fact that companies might realize it's not needed. Numbers tend to speak for them self.
-
Passive investors
The number of companies that are public has steadily dwindled. This is a concern for the IR
industry and whose who wish to practice IR
Rise of passive investing and its implications
Timing has become a major concern. That includes accessibility and visibility of news and
disclosures to all interested parties in a fair manner.
macro economy, regulation
Security issues related to the protection of material corporate news, developments and
financial information. (For example, if you send a release to a newswire service for
distribution premarket and that newswire service's platform is hacked and your earnings
announcement is published before you were supposed to report results).
i am not sure how tying how investors make decisions about stocks to fake news are related
and not sure how you prove that. fake news can be any news item anyone wants it to be. the

152
stock market is based on the future bias of others, and many make their decisions on
assumptions they understand, whether they be truly supported by fact. i really don't understand
the connection.
Long-termism vs short-termism passive vs active investing private vs public ownership
Automated news writing and algorithmic trading combined are reducing the control we have
over messaging and accurate reporting, and increase volatility.
Global adoption of MiFIDD II is the single most important thing impacting Investor relations
today.
Passive investing. HF trading in dark pools. Overcoming noise to tell story with simplicity and
clarity in a way that results in a diverse and balanced shareholder base with interests and
objectives aligned with board's and management's strategies.
Regulations
Regulation
SEC reg changes depending on Administration influences, tax reform, technology influences
and social media, activism
The accuracy of news information on social media and the impact of fake news sources
none
none
consolidation of the industry
Regulatory changes impacting capital markets
none
shifting technology, AI,
Unsure
The impact of potential changes in the sell-side research model
Technology
bla
Regulatory changes.
Legal influences, rise of passive funds (index)
cybersecurity
n/a
N/a

153
Q12 - Who is responsible for the spread of fake news within the investing
industry? Check all that apply.

# Answer % Count
1 "Scammers" 24.25% 113
2 Public Relations / Communication Firms 6.01% 28
3 Media Outlets 18.45% 86
4 The Securities & Exchange Commission (SEC) 0.64% 3
5 Investors 11.37% 53
6 Sell-Side Analysts 5.79% 27
9 Social Media Users 25.32% 118

154
7 Other 8.15% 38
Total 100% 466

155
Q12.1 - Who else is responsible for the spread of fake news within the
investing industry?

Who else is responsible for the spread of fake news in the investing industry?
sometimes competitors, but this is more a way to confuse or muddy the waters. for example,
when there is an issue they face, and they try to imply that it is an industry issue, when in fact,
it is something that is only impacting that firm
Operators of certain poor quality and deceptive websites/blogs etc.
I clicked other to cover "short sellers" who have the biggest vested interest.
I would consider looking at activities related to the role that investment bankers play, along
with investors who have a short position in a security.
I don't know that fake news exists to any meaningful extent in the investor relations
community
Social media platforms
Investment bankers and hedge funds
I don't think Fake News exists. I think it is a TRUMP'ed up phrase to distract people from
information that is counter to an organizations goals. There is always going to be some
journalism that is low-quality, but that has been around for hundreds of years.
Shareholder activists and short sellers are primarily responsible
short term hedge funds
The company itself like to make news better than it is- not the investors. Rumors can be
exaturated for a purpose..
hedge funds
I don't know what you mean by "fake news" in investor relations. I've never encountered it in
my 19 years in the business. What has occurred for decades is short selling and pushing a short
thesis to drive a stock down. That's not the same thing. Short sellers aren't pretending to be
members of the news media. Everyone with a brain knows what they're doing. I don't think it's
correct to apply the term "fake news" to anything other than "news" sources that intentionally
deceive by presenting themselves as legitimate news organizations in order to spread
misinformation. Of course, the President uses the term to describe anything said about him that
he doesn't like but is usually true.
-
Environmental groups have been shown to make statements without any facts to back them up.
See lawsuits filed by a Canadian forestry / pulp and paper company
NGO's - non governmental organizations
No direct response/answer.
hedge funds

156
There are news outlets, such as SeekingAlpha, which try to do a good job, but by allowing
"monday morning quarterback" analysts a platform, give them more legitimacy than they
might deserve. Some are very good, but some aren't. The problem of non-curated sites.
bloggers
All of the above may, from time-to-time, find value in disseminating 'fake' news. The
investment community has historically been able to assess whether communications are fact-
based or not in relatively short order. The financial markets have mechanisms in place to halt
trading when 'new news' is disseminated during market hours. The likely impact of 'fake'
news is not very high, IMO, but the potential for such activity to occur is greater than zero.
newsletters
Hedge funds
I suppose it's when a firm like Theranos hires a PR firm / David Boies to smear its opposition.
Media outlets that are not educated on the sector or industry. "experts for an hour" on the
topic.
I don't see a lot of fake news within the investing industry itself. Fake news is mainly political
and sometimes related to the economy. Companies do things that are dishonest and that they
must hide, but this is not fake news, it's a failure of the financial system to hold executives
accountable.
Lazy people who click-to-share without vetting sources.
Politicians and prosecutors and some regulators
Message boards and financial writers/promoters/influencers
Company management
Investors hoping to benefit from the spread of fake news.
Again,, how you define fake news makes all the difference in how I answer.
Activists
not aware of fake news in my industry
can't say
Short sellers
Everyone could possibly be - word-of-mouth

157
Q13 - How satisfied are you with the Securities & Exchange Commission's
(SEC) efforts in combating fake news within the investing industry?

# Answer % Count
1 Extremely Dissatisfied 5.33% 9
2 Moderately Dissatisfied 4.14% 7
3 Slightly Dissatisfied 5.92% 10
4 Neither Satisfied nor Dissatisfied 64.50% 109
5 Slightly Satisfied 6.51% 11
6 Moderately Satisfied 10.06% 17
7 Extremely Satisfied 3.55% 6
Total 100% 169

158
Q13.1 - Why are you dissatisfied with the SEC's efforts in combating fake
news?

Why are you dissatisfied with the SEC's efforts in combating fake news?
i think there should be some way to hold people accountable when they publish fake news.
Under law, if you manage more than $100M of other people's money, you have to file a
reporter 45 days after the end of a quarter on your security positions at quarter end. If you have
short sold a stock, you don't have to provide any formal disclosure. Thus, long holders are
publicly identified and short sellers get secrecy. Moreover, to short a stock, you borrow it from
a long holder and then sell it into the market. Well that to me a legal form of counterfeiting.
The person who loaned out the shares still files a 13F that they own the shares. The person
who bought the shares from the short seller also files a 13F that they own the shares. Crazy,
right?
No real ability to snuff out a multitude of channels for people to post fake news about
companies nor any real ability to identify what are anonymous posters.
Although I don't really know what they can do about it, I believe there could be more of an
effort made related to requiring individuals and companies who short stocks to file that
position with the SEC.
Because
Prosecution of those engaging in market manipulation is way too limited.
I don't see them doing anything. Not even sure it's on their radar screen.
As stated befoe, there is no policing of these blogs and chat rooms where several investors post
and read whatever it is they want to say. Slandering a company needs to be carefully
watched...
They do not have the ability to investigate adequately and when then do it is almost impossible
to track down a blogger and have any enforcement action.
Focus appears to be on implementation of regulations rather than monitoring the markets and
protecting the individual investors. Also appears to be highly biased to the large institutional
investors interest (e.g., the significant lack of transparency of shareholders for corporate
entities.)
They are not actively punishing those responsible
THEY REPRESENT INVESTORS INVESTMENTS. THEY NEED TO CLAMP THIS
STUFF DOWN AND HOLD THE SOCIAL NETWORKS RESPONSIBLE.
Haven't seen them take an active role.
Changes need to be made regarding short selling and the nefarious motiviation behind volume
trades. Stock movement needs to be more thoroughly investigated.
Generally the SEC is not responding quickly enough to make a difference. The damage is
done.
Because it's too easy to do and there are no consequences

159
not aggressive enough
I do wish there was a stronger effort to crack-down on leaks and I do think it is absurd that
people can write whatever they want about the Company on financial blogs even if there
assumptions / numbers are incorrect. But I know there isn't much the SEC can do about
preventing leaks to the media and bloggers who protected under the first amendment.
Therefore, I think the SEC should focus on making sure that public companies as well as
organizations that provide services to those companies (the exchanges, newswire services,
website host providers, banks, etc.) have the security in place to prevent hackers etc. from
accessing material non-public information.
Not applying existing regulations to obvious situations
I'm not aware it is making any effort to deal with it.
Not enough enforcement on clear fake news and slander; should be heavy financial penalties
With computers, there should be very little room for manipulating markets today, and yet it's
still done--and, it's a travesty. I'm a conservative republican and I've never liked government,
and the SEC is a perfect reason why I feel this way!
They've done nothing essentially.
SEC needs more enforcement resources dedicated to fighting those that promote fake news.

160
Q14 - Fake news will be a bigger problem within the next five years.

# Answer % Count
1 True 60.71% 102
2 False 8.93% 15
3 Neither True nor False 30.36% 51
Total 100% 168

161
Q15 - In an article published by The Washington Post, a corporate finance
lawyer was quoted saying, "[Fake news] is a modern take on the old pump-
and-dump schemes". Is fake news the modern take on "pump-and-dump"
schemes?

# Answer % Count
1 True 51.19% 86
2 False 7.14% 12
3 Neither True nor False 41.67% 70
Total 100% 168

162
Q16 - Whose responsibility is it to combat fake news within the investing
industry? Select all that apply.

# Answer % Count
1 Media Outlets 17.44% 121
2 The Securities & Exchange Commission (SEC) 18.01% 125
3 The U.S. Government 9.51% 66
4 Social Media Companies 12.97% 90
5 Investors 12.39% 86
6 Sell-Side Analysts 12.68% 88
7 Public Relations / Communication Firms 12.54% 87

163
8 Other 4.47% 31
Total 100% 694

164
Q16.1 - Who else is responsible for combating fake news?

Who else is responsible for combating fake news?
The companies themselves
It falls on the shoulders of the publicly traded company's IR or PR departments. In some cases,
they might use outside IR or PR agencies.
The corporations that fake news is about have an obligation to set the record straight
publicly traded companies
IR professionals
tbd
All parties
Companies themselves. Other investors, Owners of these blogs and chatrooms
We all are :-)
the corporates themselves
News media, Corporate management, investment bankers
The sources of the information
the company itself
Companies, themselves, and wire services, if they are not included under "media outlets."
Most effectively, companies need to respond to fake news as appropriate. That may entail
one-on-one conversations in response to endless news that people bring to companies'
attention or, if the news and its impact is material, SEC filings and/or public communications.
companies
Investor Relations
Corporates
na
The companies can provide access to the facts.
The public - people must start being critical when reading news, especially news online and in
socila media
Everyone
Public companies
Issuers of the securities

165
Investors
I think you got them listed
companies/issuers
You should define "fake news." You're using it like it's an actual term.
Individuals who read it. Vet before you share, and you cut off the snake's head.
All stakeholders
The companies themselves

166
Q17 - In your professional opinion, what is the best way to address the issue of
fake news within the investing industry?

In your professional opinion, what is the best way to address the issue of fake news in the
investor relations or financial communication industry?
Having a high quality webpage so that we can give timely our comments on any fake news.
Also reacting with a press release when it is necesary to intervene.
Not sure
Greater disclosure including relaxation of regulations regarding what companies can say and
when they can say it. The truth wins!
1) Calling it out publically when it happens and 2) Prosecution where appropriate and 3) SEC
investigations
Being open and transparent in your communications
Self-policing of websites and social media outlets would be best.
All stakeholders must be constantly vigilant for such fake news and do whatever they can to
combat or refute it.
A company has to be constantly vigilant internally and externally as to its reputation. “If you
lose your wealth, you have lost nothing, If you lose your health, you have lost something, But
if you lose your character, you have lost everything.” – Woodrow Wilson On a day to day
basis, if there is fake news out there, purposely or inadvertently created, you have to pounce on
it and get it corrected. Sometimes it is necessary to issue a news release scolding or correcting
the publication.
Make sure the source or identity of the perpetrator is known so that investors can each judge
the credibility of the source.
I don't have a strong opinion as I believe that if "Fake news" does exist it is much more of a
micro cap / pink sheets company issue and much less so for companies of $100mm market
caps or higher.
Articles monitor news about your company, peers, and sector - and have an action plan in
place to address various scenarios
Require that media and social media portals that are the channels for fake news have an
effective means by which companies can readily and quickly contact them to correct or delete
news that has been posted.
Companies simply have to address false rumors head-on with proactive communication.
Legal/regulatory remedies are difficult as it is often impossible to identify the source of a
rumor and, in any case, such rumors often emanate from overseas where Western regulators
lack jurisdiction.
Current rules on disclosure and making sure that companies follow those rules is important.
Name specific sources in news and financial information that can be verified. And require all
media outlets, including social media to name and verify sources.
The companies need to be more responsive and address rumors quicker.
people found guilty of market manipulation or the spread of inaccurate information should be
fired at he very least.

167
Not sure
Stronger oversight and penalties.
Disclosure. For example, investors are required to disclose long positions in securities, but not
short positions. I do not understand why this is true. Why not require investors to disclose
short positions? "Pump-and-dump" activities are one side of the coin. The other side of the
coin is bad-mouthing companies, spreading rumors and falsehoods in the marketplace. These
are activities designed to manipulate, and they thrive in the shadows. Bring them to light.
regularly communicating - taking a proactive approach
Ignore it
There needs to be better education of the population regarding the motivations of all media
outlets. These outlets, of all types, whether traditional or 'new' media, are motivated by getting
readers to click and thus procure advertising dollars. The more the population understands this
motivation, the more accountable these organizations will be held for irresponsible media
coverage.
More diligence by the wire services in conjunction with the companies putting out the news, as
well as additional oversight and penalties by the US Gov't and/or SEC.
critical thinking
It is up to the media outlets to combat fake news. They are the ones who are publishing the
final articles of fake news. The SEC should also be tracking down more and more on fake
news and giving consequences.
Not sure
Required disclosure by impacted companies.
fine people who promote it
Keep the lines of communication open with all interested parties
Educated investors
Better regulation of media
Regulators need to step up
Rapid response communications strategies and tactics, supported by the SEC, that directly
confront fake news. Regulations that require law firms and hedge funds to pay heavy penalties,
including court costs, for engaging in deceptive communications.
For companies - being transparent with the info made available
hold sources of the news accountable - monetary punishment
Issue press release if fake news is materially impacting the business or shareholder base.
Otherwise, it can be combated with email, calls, word of mouth with Sell side help.
Use multiple sources of information before making an investment decision
Transparency

168
Transparency - knowing the background of the author and organization. 2. Sanctions against
violators.
Tougher enforcement by the SEC and other governing bodies on both a state and federal level.
You have always had fake news (or scam artists) and always will. They're just getting more
sophisticated as time and technology allow. I don't expect any help at all from mainstream
media--they're becoming just as bad in their rush to judgement and slanting every news story
towards an opinion piece. So the only way to address it is for companies to train their
professionals to recognize, develop policies on how to address it, ensure they have control
over their own stories, and remain steadfast in not taking the bait.
SEC halts trading as needed to give companies or the media time to address fake news
sanctions
Run a clear, trustworthy business and being successful will win in the end
penalties
Have more frequent disclosure of holdinhs (move to monthly)
Public it.
Put the facts on the table- that simple
Consistent pro-active engagement with shareholders and other market participants
Checks and balances. Just that simple
I don't know of any institutional investors who rely on social media to make investment
decisions. If retail investors are doing it, then buyer beware. It's the same as relying on a tip
from your brother-in-law's friend of a friend.
Dont know
It will be very difficult to stop so it is more an issue of training analysts and investors not to
react to statements where the company has not commented.
Quality, consistent, clear ethical communication will always trump fake news.
It requires constant monitoring of the media and the shorts who promulgate fake news
HARD TO SAY
Disregard any fake news by presenting true and reliable information from the origin or source
of the news.
Financial penalties
Have better regulation around what sources analysts can use and have analysts cite sources
The continuing value of morality and truth in the marketplace.
Further regulation on social media outlets spreading fake news.
Stick to the regular rhythm of communications and don't be reactionary.

169
Labelling of fake news as fake news. Regulation to protect actions of companies identifying
and taking action against fake news.
See answer to previous question. Fake news in the financial industry is fairly limited, I believe,
because the size of the financial audience whose response can really affect a company is
relatively limited and relatively sophisticated. In my experience, companies hear about "fake
news" most often through contact with their investors, who have a compelling reason to pass
this news along and monitor the response. Since most public companies have 25 or less
institutional investors that own the great majority of their stock, if a company responds
appropriately to fake news, that response is picked up and judged rapidly, often the issue is
often almost immediately resolved. I think the sort of situation we have seen with Bill Ackman
and Herbalife - where, depending whom you believe, someone is essentially putting out fake
news over a multi-year period, is pretty rare.
Buyer beware
Honest communication from management with investors.
I don't know
n/a
stick to the company's message to the financial markets and do not let "fake news" distract the
company's efforts to communicate its goals
- Accurately addressing the fake news issues and flagging it to the country's regulators. -
having regulators shut down sites - imposing sanctions on people who spread fake news
online - fake news is a form of published gossip. The interpersonal aspect will always exist in
the investment community, only now it is more apparent because of social media. I don't think
it's possible to stop gossip, people will advocate the stocks they buy, and spread rumours about
the ones they are shorting. That's just an unfortunate fact of life.
The financial communications industry should look inside its own house and self regulate
through raising professionalism
Need a trusted, authoritative voice to counter false claims
Require the professional vetting of press releases prior to issuance by the newswires.
To make sure that the appropriate investors know the best way to access news through only
certified reliable sources and who to contact if there is any question about the news. It is also
important to monitor all news to be able to influence any "fake news" that could be addressed
"Buyer beware", unfortunately, will be the most effective way for investors to learn about the
influence of fake news on their financial communications industry.
truth-telling with facts
Check your sources for information.
Constant vigilance and not assuming something is true or factual just because it was published
by a reputable institution or individual.
Don't know
Don't allow social media posts to be done anonymously

170
N/A
Good communications channels to counteract
A big concern is also computer-generate articles riddled with inaccuracies and no oversight.
Hold people accountable who are spreading the news.
Only trust news from known outlets.
Heavy fines or jail sentences, as we have in the UK
tell your own story
Aggressively distributing facts to re-educate various constituencies.
Two: legal consequences for those creating the fake news and educating investors where to
find the truth (direct from companies)
Acknowledge the problem, educate the market
Conducting independent research and due diligence
Investigate potential sources of fake news
Educating the receiver of the news to be critical - fake news is out there and it's not going to be
any less of it.
The sec should better address articles designed to manipulate stocks which contain untruths
The more valuable asset a publicly traded company has is its reputation. A publicly traded
company first communications priority is to develop a honest and forthright reputation. This is
so that if there is a fake news scandal or rumor that emerges, investors, analysts, and legitimate
media would be more inclined to believe the company.
SEC fines
companies need to be the best, most reliable source...not outsiders
Make the facts of your own company easily accessible. Investors and Analysts also have an
obligation to research their sources.
Reputation and credibility - either investors believe you or they don't. There are multiple ways
to get your story out, but still readers either beleive you or they don't. (or they immediately
react or they don't)
education, awareness - we all need to take part in combatting fake news when we come in
contact with it
By educating the public through financial literacy and by taking the time to do due diligence
on news outlets and information before reporting on it. While it may slow down the news
process, in the end there will be more accurate reporting and lessen "fake news".
I'd like to see some form of verification system, like Twitter does, with company statements.
Also, highlighting organizations that spread fake news.
IR professionals need to make sure to get the story out and increase communications with
investors / sell-side to combat any misinformation out there. Media outlets and social media
sites need to be more vigilant in screening credible media.

171
Break up Google and Facebook and regulate / punish them properly
Experience and education. So you will know how to 'read' news and which sources to trust.
Transparent communication by the company
Material non-public communications -- through the established wire services -- should be
restricted to outside market hours. The SEC and the markets (NYSE/ICE, NASDAQ, etc.)
should routinely shut-down trading when material news is distributed when the markets are
active, and until the after-market trading has closed.
make it easier for companies be the source of information and respond quickly to
misinformation. Press releases and SEC filings can't be the only way to broadly communicate.
Responsible media outlets must root it out and expose it, especially if it begins to affect
mainstream investing options
N/A
Clear, consistent, compliant, credible communication
Regulation
Verify news stories and authenticate sources
Supporting a robust media and prosecuting those who utilize it to generate financial gains.
Transparency and adherence to Reg FD. Users of financial information need to validate the
credibility of the source.
It will need to be a combined effort.
transparency and frequency of engagement on the part of companies/issuers with major media
outlets, sell-side analysts and major institutional investors
Better checks and balance when news is issued.
Treat it as a shared problem. Like cybersecurity, its a shared risk and its everyone's concern
Awareness and exposes of fake news pushers.
Don't go public or take money from outside investors.
Absolute transparency on behalf of C-suite and executive leadership when it comes to business
goals, performance, and communications.
It doesn't appear to be much of a problem. Perhaps this is a larger issue for micro-cap stocks
(which have always had a pump and dump atmosphere)?
Educate people on how to spot it and on what's a reliable source and what's not.
Seize the assets of all banks in the Cayman Islands and other countries that allow multi-
national companies, corrupt government officials, and terrorist organization to carry on illegal
activities, evade taxes and launder money. Also break up banks like Deutschebank that are
caught laundering money, and put their key executives in prison for extended terms.
not sure

172
Honesty
Expose the sources of fake news Train staff on red flags
Regulate
Have a better system of reporting infractions and accountability with respect to the
organizations that allow it to be published.
Teach history. Literally, the study of history and how it's written, and how to evaluate sources.
Huge fines
For one thing, don't ass more laws or regs. That will not fix anything, just look at all the laws
and regs we currently have that fail to change behavior. Education is critical. Investors
demanding greater transparency is an important trend also
Not sure. It's always been an issue and as long as the internet exists and people can say
whatever they want without consequence, there isn't a way to fix it.
Greater regulation
better and stronger regulation and enforcement.
Know your sources.
Be alert to stories that "seem to good to be true." And do due diligence on management teams.
Just have a natural healthy amount of skepticism
It has to be a multi-facet approach - the SEC, buy-side and sell-side, IR firms, management
teams...everyone needs to work together.
Regulation, awareness, education
Those who are caught planting a false story should have consequences for their actions (not
the journalist, but the individual who went to the journalist with the false information) and the
journalist should be required to retract the story. Better tech security all around and social
media companies must do a better job ridding their platforms of bots, fake accounts, etc.
Companies should stick with their message and have a solid, proactive program of meeting
with influential investors. fake news on stocks and companies has always been around. i
simply don't understand how this is new news. it may have gained more of YOUR attention as
a 20 something, but this is not a new idea. it's the way the stock market has worked since
inception. period. i'm not sure you understand the stock market if you are asking these
questions. the sec can launch an investigation based on someone's analysis which may be
deemed fake news but that analysis is provided to the sec directly. if the sec was that worried
about rumors on stocks, it would shut down seeking alpha, the most tragic, anti-company,
individual investor driven and misleading source of investment information. do a piece on
seeking alpha instead and interview companies on their views. then you will have good
information on how companies feel about unsubstantiated rumors. what i think you are calling
fake news but i really have no idea.
Call it out Penalize those who spread it

173
Companies (and their PR/IR advisors) have to be constantly vigilant to fake news, acting to
correct the record instantly -- it may not always be possible or effective, but no other entity has
at much at stake
For the media reporting it to call it out.
First, be able to define it. Because it was a smear invented in a political campaign, the name
was created to have an emotional impact - but such impact doesn't exactly promote a
dispassionate inquiry, and is an awful foundation for a regulation. And if we can't name it in a
neutral way, we can't do something about it, first, and second: we can't really know if the
reports that this research might smear as fake news are just like the reports that your politics
leads you to disagree with, if not to react with outrage and indignity. In other word, we're not
going to do anything about fake news for the simple reason that we believe in free speech and
press, we think investors who make investment decisions should take responsibility for
research and for determining their own truth rather than rely on anonymous ghosts on the
internet, and because we know one thing for sure: government is certain to make things worse
the more it tries to help.
Once proven, perpetrators should be heavily fined, millions of dollars per offense.
With Information Systems technology and analytics!
Educate, educate, educate.
ensure the accuracy of information and cross check the sources
require identity verification from folks posting on the chat rooms and social media forums.
Also have consequences for knowingly spreading fake news, enforced by the SEC.
na
By getting the true story out as fast as possible
No "best way". Refer to question 16 for entities which must do a better job self policing or if
necessary enforcement action by regulatory agencies.
push back hard
Transparency
Unsure
I haven't encountered an instance of fake news impacting a stock. I don't think it is really
much of an issue.
Due Diligence
bla
Strong regulatory enforcement and punishment, combined with investor education and
awareness.
Spread the word that it exists and be wary of it.
quickly, decisively and authentically

174
use of algorithms
Only publish information through credible media outlets.

175
Appendix F: Participants’ Region of Residence by U.S. State
U.S. State
Number of
Participants
Arkansas 1
California 43
Colorado 2
Connecticut 6
Florida 2
Georgia 2
Idaho 2
Illinois 10
Indiana 1
Iowa 1
Kentucky 1
Massachusetts 4
Michigan 3
Minnesota 5
Nebraska 1
New Jersey 5
New York 36
North Carolina 1
Ohio 3
Pennsylvania 6
South Carolina 1
South Dakota 1
Tennessee 2
Texas 13
Utah 1
Virginia 3
Washington 1
Washington D.C. 1
Unspecified 5
Total 163

176
Appendix G: Participant Occupations
Occupation
Number of
Participants
Account Director 1
Account Executive 1
Account Manager 1
Advisor 1
Agency Owner 1
Agency Owner & President 1
Associate 3
Chairman 1
Chief Executive Officer 5
Chief Financial Officer 2
Chief Financial Officer & President 1
Chief Strategy Officer 1
Consultant 31
Director 22
Executive 3
Founder & Senior Executive 1
Group President 1
Head 3
Intern 1
Manager 4
Managing Director 8
Managing Director & Partner 1
Managing Partner 1
Officer 4
Partner 2
President 2
Senior Account Director 1
Senior Associate 1
Senior Coordinator 1
Senior Counselor 1
Senior Director 3
Senior Manager 2
Senior Vice President 8
Student 1
Vice President 26

177
Financial Communications - Role Unspecified 2
Investor Relations - Role Unspecified 36
Investor Relations & Corporate Development - Role Unspecified 1
Investor Relations, Corporate & Crisis Communications - Role Unspecified
1
Public Relations - Role Unspecified 6
Public Relations & Other - Role Unspecified 2
Strategic Communications - Role Unspecified 2
Unspecified 3
Total 200

178
Appendix H: Fake News’ Impacts to Job Tasks

4
6
4
8
1
2
2
1
1
2
2
1
2
1
2
17
0 2 4 6 8 10 12 14 16 18
More time spent media monitoring
Having to address misconceptions
Has made it harder to determine people's intentions
Answering more investor inquiries
Shift in approach to creation and delivery of content
Re-educating individuals about news consumption
It has become harder to advise clients
It hasn't affected my job role
More focused on gaining earned press coverage
Considering reputation management
Requesting corrections / Publishing correction
Now work for a client on a crisis basis
Affects producivity
More aware of what is happening within the industry
Further reinforcement of company messaging
Further checking on sources and/or facts
Number of Responses
Themes
How has fake news affected the way you conduct your work?

179
Appendix I: Industry Concerns
Concern
1 2 3 4 5 6 7 8 9
Total
Fake News 6.51% 5.92% 6.51% 9.47% 13.02% 12.43% 20.12% 17.16% 8.88% 169
Cryptocurrency 9.47% 5.33% 4.14% 5.92% 11.24% 5.33% 14.20% 24.26% 20.12% 169
Political
Influences
10.65% 8.28% 15.38% 14.79% 18.34% 10.06% 8.28% 9.47% 4.73% 169
Social Influences 5.92% 7.69% 15.38% 12.43% 20.71% 15.38% 13.61% 4.73% 4.14% 169
U.S. Economy 24.26% 20.12% 11.83% 7.10% 8.88% 5.33% 7.10% 7.10% 8.28% 169
Global Economy 17.16% 17.75% 23.67% 5.33% 8.88% 2.37% 7.10% 8.88% 8.88% 169
Industry
Performance
30.77% 20.12% 10.65% 5.92% 7.10% 2.96% 2.96% 8.28% 11.24% 169
Corporate Social
Responsibility
6.51% 5.92% 11.83% 11.24% 20.12% 18.93% 11.83% 6.51% 7.10% 169
Other 14.71% 1.76% 2.35% 5.88% 20.00% 4.71% 8.82% 3.53% 38.24% 170

180
Appendix J: Other Industry Concerns

34
13
39
26
45
43
22
18
0 5 10 15 20 25 30 35 40 45 50
None
Other
News & Information
Technology
Regulations
Investing Industry
Professions
Publicly-Traded Companies
Number of Responses
Concerns
What other concerns do you have about the future of the investing
industry?
Total: 240

Abstract (if available)

Abstract The term “fake news” gained notoriety nationwide after its role in the 2016 U.S. presidential election. Since then, and throughout 2017, there have been many reports published about fake news entering the investing industry. From 2016 to 2017, there was a ~153% increase in reports surrounding “fake news” and “investing”. A popular sentiment among these reports—fake news is altering stock valuation. However, the increase in news reports about “fake news” and “investing” over the past two years does not highlight the changes or problems, if any, to investor and financial communication. The purpose of the thesis is to establish how fake news has impacted the investor relations (IR) and financial communication practices. Through a media content analysis and global survey, the thesis addresses: 1. How prevalent fake news is within the investment industry? 2. Has fake news impacted the way IR and/or public relations (PR) practitioners carry out their job responsibilities? 3. What are IR and PR professionals’ predictions about the future of fake news? While fake news currently has had little impact to the practice of IR and financial communications, there is a disconnect among IR and PR industry professionals. The majority of IR and PR industry professionals agree the fake news problem will grow in the coming years. However, there is no urgency to take action about it or prepare for the future. Communication between publicly-traded companies and shareholders has had no drastic changes and, therefore, there has been no extreme changes to job tasks and responsibilities of IR and PR industry professionals. Rather, fake news has just increased the time spent on typical IR and PR tasks current tasks. This is a point of concern. The majority of IR and PR industry professionals predicted fake news will become a larger issue within the next five years. Yet, more than half of IR and PR industry professionals have not changed the way they conduct their work or prepared to combat this. An even bigger problem than IR and PR industry professionals not preparing for their predicted growth of fake news is the lack of agreement on how to combat it. There needs to be an industry-wide effort to address these issue. Specifically, in relation to fake news clarification, increasing the awareness of fake news, improving visibility of securities fraud-related resources, development of internal policy in addressing fake news, and stakeholder management.

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Asset Metadata

Creator Watt, Sue-Mae (author)

Core Title The effects of fake news on the practice of investor relations and financial communications

School Annenberg School for Communication

Degree Master of Arts

Degree Program Strategic Public Relations

Publication Date 04/13/2018

Defense Date 04/13/2018

Publisher University of Southern California (original), University of Southern California. Libraries (digital)

Tag corporate communications,fake news,financial communications,investor relations,OAI-PMH Harvest,Public Relations

Language English

Contributor Electronically uploaded by the author (provenance)

Advisor Cook, Fred (committee chair), Kahn, Gabriel (committee member), Stamper, David (committee member)

Creator Email sue-mae.watt@live.com,suemaewa@usc.edu

Permanent Link (DOI) https://doi.org/10.25549/usctheses-c89-8158

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