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Stock Market Website

stock market website legality

     
4:39 am on Mar 29, 2006 (gmt 0)

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Can you be sued for telling people to buy a stock on your website and the stock goes down?
4:45 am on Mar 29, 2006 (gmt 0)

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Yes.

However, there's likely a few more facts that would have to established than simply the fact that the stock went down, such as you were selling whilst telling others to buy.

You would likely do well to do some hours of reading about the subject, starting perhaps at SEC.gov.

Might also want to spend a few bucks on getting guidance from a securities lawyer.

7:15 am on Mar 29, 2006 (gmt 0)

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Do you have to disclose when you buy and when you sell?
5:34 pm on Mar 29, 2006 (gmt 0)

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There's a difference between "buy" and "recommend".
6:14 pm on Mar 29, 2006 (gmt 0)

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Pay attention to how many people couch their words when discussing stocks.

For example, you can write about the stocks that you are buying and selling, and why. You can even create an imaginary portfolio where you choose the stocks. You are not telling anyone else that they have to follow suit.

6:28 pm on Mar 29, 2006 (gmt 0)

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it's a minefield....personally I would stay away from this, unless you are really writting up legitimate articles about a company and their future.

[edited by: walkman at 6:29 pm (utc) on Mar. 29, 2006]

6:28 pm on Mar 29, 2006 (gmt 0)

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You are walking a very dangerous line. If you are in a position of influence, I believe the SEC has strict guidelines to follow.

For example, it's my understanding that a nationally syndicated financial radio show host is prohibited from buying or selling any stocks he discusses on his show for 30 days after the broadcast (or something like that).

7:26 pm on Mar 29, 2006 (gmt 0)

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What if I am just an average Joe with a website that gets only a few visitors and in the footer of my website I state that I often make wrong calls and that I am not responsible for any decisions they make to buy or sells stocks that I talk about.
8:01 pm on Mar 29, 2006 (gmt 0)

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What if...

Either nothing happens or you get sued. Or nothing happens for a long time and then you get sued. Whether or not the suit has any merit will be determined by a judge (or jury), probably after thousands of dollars in legal fees. Even if you successfully win the suit, you're still out the legal fees. But if the opposing lawyer does some digging and finds out that your trades contradicted your advice, your butt may be fried.

Hey, it's your site, it's your money (for now), it's your decision.

2:16 am on Mar 30, 2006 (gmt 0)

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Why would someone's trades contradict their advice?
2:25 am on Mar 30, 2006 (gmt 0)

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>> Why would someone's trades contradict their advice?

not sure if you're pulling our leg or not, but here it is anyway: you convince idiots to buy, buy, buy, and you sell your stock (bought well before the buying frenzy) while the price is inflated because of their purchases. They of course lose.

1:45 am on Apr 7, 2006 (gmt 0)

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What if you don't sell and you hold on to your buy recomendations long term for more than a year or so?
2:26 pm on Apr 7, 2006 (gmt 0)

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for more than a year

You might lose all your money - i've seen stock sink in just one day.
10:12 pm on Apr 7, 2006 (gmt 0)

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Right, but we're talking about what is legal and what is not.
10:24 pm on Apr 7, 2006 (gmt 0)

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Just to expand on the topic. I have created a personal web site to control my own investments (and my wife's and family now), and I have made it very customizable. I do not give advice of any kind, I just feed data into it so my visitors (again, just family by now), can make their own decision. I have be thinking now on expanding a little and offer it as a service but have been thinking also in the side effects of doing so. I would make clear that this is just a tool so you don't need to keep checking on your own every day or pulling your calculator to know your figures, but it still worries me that some people could think that I can be responsable for their wrong decisions.

What WebmasterWorld people think about this kind of services?

9:10 am on Apr 8, 2006 (gmt 0)

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<I>What WebmasterWorld people think about this kind of services?</I>
I don't know about WebmasterWorld, but I think it's a great service, if you can get it right. Portfolio tracker is pretty much the only reason I subscribe to Morningstar for $13 a month.

But you have to get it right, which can be tricky. Users have to be able to specify the purchase price, the number of securities and the time of their investment, otherwise returns will be skewed.

Most portfolio trackers default to the closing price of the securities offerred which can significantly skew results.

5:55 pm on Apr 11, 2006 (gmt 0)

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Really what I'm talking about can't be that risky. Have you seen Jim Cramer's Mad Money T.V. show where he makes buy and sell recommendations on national tv everyday?
6:04 pm on Apr 11, 2006 (gmt 0)

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Anybody can be sued for anything, but like some other people said, it's more the way you phrase it that can either make it not a problem or a problem.

Bad: "Buy XYZ and you are sure to make 1000% in the next month!"

Good: "I like XYZ, in fact I bought it for my own portfolio, because they have beaten analysts earnings estimates the last 8 quarters."

Stick to the second comment and you should be fine.

6:30 pm on Apr 11, 2006 (gmt 0)

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bull#*$!, i am investment analyst and started writing investment ideas almost 10 years back on net. No investment advice is full proof, before suing you, top fund managers will get sued for contradictory recomondations they make after every earning release. So dont worry and go ahead, simply copy disclaimer clause from few of the leading investment sites.
2:57 am on Apr 22, 2006 (gmt 0)

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Is the disclaimer even necessary? Is it not implicity implied?
3:21 am on Apr 22, 2006 (gmt 0)

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Idea: How about asking a lawyer?
3:24 am on Apr 22, 2006 (gmt 0)

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>> Idea: How about asking a lawyer?

that would be another freewebsiteidea ;)