The Securities and Exchange Commission (SEC) has opened an investigation into Galena Biopharma Inc (NASDAQ:GALE) for engaging a marketing firm called The Dream Team Group that allegedly helped the company boost its stock price just ahead of new stock offerings and insider sales, reports Adam Feuerstein at The Street. Feuerstein can probably take some of the credit for the SEC probe, writing an expose of The Dream Team’s practices in February around the same time that the probe kicked off.

Galena Biopharma SEC

$50,000 marketing payment was undisclosed

Galena Biopharma Inc (NASDAQ:GALE) paid $50,000 to the Dream Team Group back in July 2013 to help it market its stock, which is legal as long as the marketing is clearly labeled as such, but the articles didn’t contain any disclosure to let people know that the author was being paid to tout a stock. Feuerstein also describes a network of front websites used by The Dream Team to give the impression that many different media outlets all have the same opinion (again, without disclosing payment) and writers using pseudonyms to write multiple bullish articles on Galena in the same venue.

SeekingAlpha writer poses as stock tout to investigate Dream Team

More recently, Richard Pearson wrote an article on SeekingAlpha detailing his undercover investigation of The Dream Team Group. He was approached by the company to write articles for them, and decided to play along to get a snse of how the scheme worked. He was offered $300 per article, but he had to allow the clients (Galena Biopharma and CytRx) to edit the stories before publication. He gathered information on other writers who have worked with The Dream Team, and some confirmation that people within the two companies were directly involved in editing the documents. Importantly, part of the job offer required him to not disclose that he was being paid to write the articles – when SEC regulations would require him to do so (his account is incredibly detailed, with lots of supporting documents, worth a look if you’re interested in the details of how these operations work).

Pearson found articles placed by The Dream Team in Yahoo Finance, Forbes, Motley Fool, Wall Street Cheat Sheet and Seeking Alpha in addition to the articles Feuerstein had already uncovered at The Street. These publications have taken the articles down, and no doubt they try to keep such things off their sites, but reading through Pearson and Feuerstein’s articles, you get the feeling that the pump and dump industry is uncomfortably prolific.