Is 50 Cent Using Twitter to 'Pump and Dump' Stock?

Rapper's hype for a penny stock raises questions about ethics

January 12, 2011 3:40 PM ET
Is 50 Cent Using Twitter to 'Pump and Dump' Stock?
Denise Truscello/WireImage

Last weekend 50 Cent used his Twitter account to hype up the stock for H&H Imports, a small Florida-based company that includes TV Goods, a smaller company that markets products in informercials, among its holdings. Sales of the penny stock increased by 290 percent following the endorsement, resulting in a paper profit of almost $5.2 million for the rapper, who owns 7.5 million shares in the company.

Photos: 50 Cent and Kanye West: The Rolling Stone Cover Shoot

Sales of the stock came back down to earth yesterday, dropping in price by nearly 25 percent — though they're still valued much higher than in previous weeks. Some speculators, including ProPublica's Jesse Eisinger, are suggesting that 50 Cent may be engaging in a "pump and dump" strategy intended to artificially increase the value of the company for its shareholders' short-term gain.

Photos: Kanye West, Jay-Z, 50 Cent, Diddy Onstage Together

The rapper has thus far avoided violating laws against "pump and dump" schemes by not yet selling his stock in the company. Of course, he does not actually have that option, as his 7.5 million shares are currently restricted from being sold until certain conditions are met.

Photos: Sundance 2008: 50 Cent, U2, Velvet Revolver, Patti Smith Bring the Rock to Park City, Utah

Though it definitely looks like 50 Cent was in some way taking advantage of his celebrity and his nearly 4 million followers on Twitter, he was responsible enough to add a few caveats regarding the stock after encouraging his fans to invest. Tweets such as "Do ur homework" and "Talk to financial advisor" may be a bit skimpy in terms of offering a full disclaimer, but may be enough to keep the SEC off his back if they decide to take an interest in the case.

What Do 50 Cent, Carmen Electra & Shaquille O’Neal Have in Common? Touting Penny Stocks [ProPublica]

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