News Hounds' Brian has written many times about Bulls & Bears' Tobin Smith - a reliable conservative mouthpiece if ever there was one. It turns out that mouth was for hire. He was fired from Fox today as a result. UPDATED
As Marketwatch (part of the Wall Street Journal, a sister company to Fox until the big News Corp. break up), reports, Smith's newsletter recently touted a company called Petrosonic. For the endorsement, Smith's company received $50,000. It seems the money was well-spent as far as Petrosonic was concerned. For everyone else? Not so much, perhaps. Marketwatch says:
And with Petrosonic up over 40% year-to-date and more than 135% in the last year, anyone who can’t see past the smiling face of the popular, charismatic Smith might think the stock really is “the investment opportunity of your lifetime,” as it’s described in the flyer.
For one, there’s the company’s lack of revenues, as in zero, according to filings, though Petrosonic did issue a press release late last week about how the company — which says it has a unique process for upgrading heavy oil — is now generating revenue from its plant in Albania.
Also overlooked in the hype are Petrosonic’s rising losses, negative cash-flow and the “going-concern letter” from auditors who think there is “substantial doubt” in Petrosonic’s ability to survive. In its regulatory filings — where all of those conditions are readily evident — Petrosonic notes that the business will fail if it can’t generate adequate cash/financing; those concerns aren’t mentioned in Smith’s “special report.”
According to the article, Smith's contract was terminated today.
6/19/13 UPDATE: According to Media Matters, this was far from Smith's first time pushing a dubious stock:
Other stocks that Smith promoted to conservative newsletter subscribers paint a similarly rosy picture of volatile companies with low share prices. At least two stocks are now virtually worthless: BOLDFACE Group closed yesterday at $.06 and IceWeb closed at $.02. Two other companies, Plandai Biotechnology and Replicel, are both trading at between approximately $.50 and $.65. And Medient Studios is trading at near $1 a share.
Profiting from lies is FixedNews business model.
Smith probably wrote an article somewhere defending Julian Epstein or maybe they thought he didn’t pile on Epstein hard enough.