This morning atTechCrunch Disrupt, president and editor-in-chief of The Huffington Post Media Group, Arianna Huffington, in a “Fireside Chat” made an interesting and possibly illegal statement concerning the stock of AOL.
AOL, you’ll recall,announcedon February 7, 2011, it would acquireThe Huffington Postfor $315 million and make Huffington president and editor-in-chief of The Huffington Post Media Group. This gives Huffington control over not onlyThe Huffington Post, but existing AOL properties such as Engadget, AOL Music, Patch Media and TechCrunch, whichAOL purchased in September.
According to aTweetfrom Dylan Byers, a reporter forAdWeek, Huffington, speaking to Michael Arrington, founder and co-editor of TechCrunch, stated the following,
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ATwitter search of “AOL Stock”features a stream of similar Tweets concerning Huffington’s statement.
Interestinglythe videoof Huffington’s statements have been cut off at the point where Arrington enters the stage.
Video streaming by Ustream
That said, it could be argued that that Huffington is engaging in market manipulation concerning AOL’s stock.
Section 9of the Securities Exchange Act of 1934 prohibits market manipulation, a deliberate attempt to interfere with the free and fair operation of the market and create artificial, false or misleading appearances with respect to the price of, or market for, a security, commodity or currency.
Huffington, in telling those they will “make a lot of money,” if they purchase AOL stock is potentionally creating a misleading appearance with respect to the price of AOL stock, a stock which continues to hover near its 52-week low of $18.44.
Adding more credence to potential illegality of Huffington’s statements is AOL’s stock price today. Since Huffington’s statements,the stockhas risen $.26 from $19.40 to $19.66 at the time of publishing despitemissing its most recent earnings estimates.
If one’s found guilty of violating SEC rules,Section 32of the Securities Exchange Act of 1934 indicates one could face penalties of:
Story byJeff Cormier
Jeff Cormier, a graduate of SMU and the TW School of Law, is the co-founder of C4 Universe, LLC. Desire to know more? http://about.me/jffc(show all)Jeff Cormier, a graduate of SMU and the TW School of Law, is the co-founder of C4 Universe, LLC. Desire to know more? http://about.me/jffcrmr/bio...
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