50's Tweet May Draw SEC Heat

By Sajid Farooq
|  Thursday, Jan 13, 2011  |  Updated 2:30 PM PDT
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Great Gadget Photos: CES 2011

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LAS VEGAS, NV - JANUARY 06: Recording artist 50 Cent (R) appears at a news conference announcing a partnership with Sleek Audio and the development of wireless audio headphones at the 2011 International Consumer Electronics Show at the Las Vegas Hilton January 6, 2011 in Las Vegas, Nevada. CES, the world's largest annual consumer technology tradeshow, runs through January 9 and is expected to feature 2,700 exhibitors showing off their latest products and services to about 126,000 attendees. (Photo by David Becker/Getty Images)

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Taking stock tips from a rapper named 50 Cent may not be the wisest place to get financial advice, or is it?

The rapper turned actor turned entrepreneur increased the value of his stock portfolio by several million dollars with a simple tweet.

50 Tweeted about investing in HNHI to his nearly four million Twitter followers. The rub is the rapper owns a lot of shares of the penny stock.

And shortly after his tweet, the stock jumped from mere pennies to about 40 cents a share. Still not a lot of money, but if you own millions of shares, you are not theoretically a rich rapper. On paper, 50 Cent increased his net worth by millions of dollars in a matter of minutes.

But while the Internet is abuzz about what the rapper did, was the whole thing legal? If you ask the Securities and Exchange Commission you are likely not going to get an answer.

The fine folks at Esquire did just that and we're told "we can neither confirm nor deny the existence or non-existence of any investigations" and "investors in penny stocks should be prepared for the possibility that they may lose their whole investment."

Not satisfied with the answer, the gentleman's magazine called up a prominent professor of securities at Yale Law School for a clearer answer.

"The pump-and-dump stock on his Twitter — great story," Jonathan Macey told Esquire.com. "How can they call it a take if he didn't sell his stock? I've got my green visor on: The stock's $0.25 a share, how much could he have pumped it up? Let's say that I'm a huge rapper, and a gazillion people follow my Tweets.

And let's say I own stock in some company, we'll just call it... H&H Imports. And let's say I tell everyone this is a great company and I think they should get into it. That hyping does not rise to the level of stock manipulation. The kind of stuff I've said is not specific enough to really be material."

So is 50 an SEC investigation waiting to happen or a genius? You decide.
 

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