PR (Press Release)

### Published is not the same as filed Anyone can put out a press release. Wire distribution is a paid service, and paying for it proves nothing about the contents. A regulated disclosure is a different object. Under Regulation FD, furnishing or filing a Form 8-K is one accepted way of making information public, and any alternative must be reasonably designed to give the information broad, non-exclusionary distribution ([17 CFR 243.101](https://www.law.cornell.edu/cfr/text/17/243.101)). If a company leaks material information selectively, Reg FD requires public disclosure simultaneously when the leak was intentional, and promptly when it was not ([17 CFR 243.100](https://www.law.cornell.edu/cfr/text/17/243.100)), where promptly means no later than the later of 24 hours or the opening of the next day's trading on the NYSE. So the first question to ask about any headline is not "is this bullish". It is: is there a filing behind it? A partnership worth real money usually leaves a paper trail. A vibe usually does not. ### Why cheap PRs work so well on retail The SEC's own microcap red flags read like a checklist for the kind of release that baits a spike: implausible press releases, a stock promoted more heavily than the company's actual products or services, dramatic price or volume moves for no apparent reason, and companies with little or no assets and minimal revenues ([SEC Investor Bulletin, Microcap Stock Basics: Risk](https://www.investor.gov/introduction-investing/general-resources/news-alerts/alerts-bulletins/investor-bulletins/investor-2)). The SEC describes the machine plainly in its alert on fraudulent stock promotions. Paid promoters and insiders stand to gain by selling their shares after creating a buying frenzy and pumping up the price, and the SEC warns that even if you never hand the promoter a cent, your purchases may be what lets them offload otherwise valueless shares ([Investor Alert](https://www.investor.gov/introduction-investing/general-resources/news-alerts/alerts-bulletins/investor-alerts/updated)). There is a legal tell. Section 17(b) of the Securities Act makes it unlawful to publish a description of a security for consideration received from an issuer or dealer without fully disclosing that consideration and its amount ([15 U.S.C. 77q(b)](https://www.law.cornell.edu/uscode/text/15/77q)). That is why paid promotions carry a compensation disclaimer buried in the fine print. Go looking for it. If someone was paid to put that story in front of you, the story is an advertisement. ### The regulator's blunt instrument When the accuracy of public information about a company is in question, the SEC can summarily suspend trading in the security for up to 10 business days under Section 12(k)(1)(A) of the Exchange Act ([15 U.S.C. 78l(k)](https://www.law.cornell.edu/uscode/text/15/78l)). While a suspension runs the security cannot be traded, so the position is simply frozen with you in it. That is the real tail risk of trading a story you never checked. ### Questions that separate substance from smoke - Is there a companion SEC filing, or only a wire release? - Are there names, counterparties and dollar amounts, or only adjectives? - Is it a signed contract, or a letter of intent, a memorandum of understanding, or an "exploring" announcement? - Has the company been issuing stock lately? A spike is a convenient window to sell shares into. - Who profits if you buy this headline today?