Undisclosed paid content on Wikinvest

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SEVERAL months ago, I stumbled across information in a Securities and Exchange Commission (SEC) filing that raises important questions about the integrity of information posted on the popular Wikinvest website.

According to the filing, micro-cap biotech company INVO BioScience Inc. (OTC:IVOB) is paying a retainer of 1 million shares of restricted stock to a firm called CollegeStock Inc. for a variety of services, including creating content for the company on Wikinvest.

Having talked to Wikinvest’s staff and knowing how serious they are about maintaining the impartiality of the content on their site, I was a little surprised to find such public evidence that someone was being paid to post information to Wikinvest on behalf of a company.

A copy of the service agreement between CollegeStock and INVO Bioscience listing services on Wikinvest

And when I dug deeper into the Wikinvest activities of CollegeStock president Thomas McCarthy, it became clear that he may be representing a number of other clients on the site – and in each case his affiliation to the companies is not being disclosed to Wikinvest users.

It turns out that McCarthy has been very active on Wikinvest, so much so that he has two profiles: one under Tom McCarthy aka “The Dean”, and another as Thomas McCarthy.

And under each of these profiles, his activity on the site has allowed him to rise to the title of Senior Director, which is the highest rank contributors can achieve. As Tom, he has made 927 edits to 224 articles and as Thomas he is responsible for 634 edits to 144 articles.

McCarthy’s profiles list him as the top contributor on a range of companies, including:

• Invo Bioscience Inc
• Brite-Strike Tactical
• Viral Genetics
• WWA Group Inc.
• Cancer Therapeutics Inc.; and
• Sector 10

Now, there is no information on Wikinvest to suggest that McCarthy is being or was paid by these companies to contribute information to Wikinvest. However, if you visit CollegeStock.com and click on a tiny link at the bottom of the page that says “Disclaimer,” you’ll learn some interesting details, including McCarthy’s relationships with the following companies mentioned above:

• INVO Bioscience. Compensated two hundred thousand shares of IVOB from a 3rd party (Lionshare Ventures LLC), which he sold. Additionally, he has been retained by the Company as a consultant for compensation of 500,000 rule 144 restricted shares (note: the company’s SEC filings says it’s 1 million) that he can not sell “until at least March 1, 2010.”
• Brite Strike Tactical, Inc. He has been retained as a consultant for a term of one year in exchange for 2 million rule 144 restricted shares that cannot be sold until at least August 28, 2010.
• Cancer Therapeutics, Inc. Compensated $35,000 to provide corporate communications services for three months by a 3rd party (Thomco International). Has also traded CTHP in the past but has sold all shares.
• WWA Group, Inc. Compensated a total of $31,000 to provide corporate communications services for one month by a 3rd party (Veritas Communications) and that contract has since expired.

And those are just some of the relationships I found between companies McCarthy represents and companies on whose Wikinvest pages he’s been active. There are many more companies listed in the CollegeStock.com disclaimer that I didn’t investigate in detail.

I asked Patrick Cushing, Product and Business Development Manager at Wikinvest, what they would do about this and here’s his reply:

“After you alerted us to the PR on wikinvest, we contacted the author to let them know that we were aware of their position and were reviewing all of their edits for any perceived bias.  Upon review, though, the author had stayed within Wikinvest’s guidelines — unbiased, neutral content with little in the way of predictions or overly glowing descriptions.  In fact, this author happened to be better than our average contributor at citing their references.  As of now, these edits have been allowed to stand and we’ll continue to monitor issues like these as they arise to see if our standards should change.

“Ultimately, though, if you or any of our other users disagree with the content, there’s a great way to counteract it — help edit and contribute!  On our end, we can be on the lookout for generally biased content or content that lacks citations, but just as powerful are our users as they can discuss biased content, edit the wiki directly, etc.”

I guess being paid (in stock or cash) to post content isn’t considered being biased at Wikinvest. So rather than waste my time counteracting paid content on the site, I’ll do one better and simply avoid using it.

Dominic Jones

Dominic (bio & disclosures) is IR Web Report‘s founder and an online investor relations consultant. He advises leading public companies and investor relations service providers worldwide on using the web for disclosure, engagement and profile building. You can contact him via the contacts page.